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PRESENTED BY 



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To My Friend, 

Percy Werner, Esq. 

Whose Criticism Has Greatly 
Aided Me In This Work. 



COPYRIGHT — 1922 

BY 

WILLIAM PRESTON HILL 

Made In the United States of America 




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#arialism ar ^nfrtoiibttalism ? 



A timely inquiry into: The effect of labor-saving 
machinery on production* the wages of labor, 
the distribution of wealth, and the source 
of the labor fund; together with a 
discussion as to the sagacity or 
short-sightedness of the indi- 
vidualist and collectivist points 
of view, and the wrong or 
right road to progress 



By 



DR. WM. PRESTON HILL 



a^^|p|5$p l«6 



ALBA COMPANY 

4541 Gibson Ave. 

St. Louis, Mo. 

1922 



INTRODUCTION, j f ^ 

Social unrest and discontent among the masses of 
the people are very evident today among all the 
civilized nations of the world. Many competent 
obseivers have ascribed this to the great war, which 
unsettled the minds of multitudes of people and 
strengthened the tendency to violence and disorder. 

But even before the war, there had been for 
many years a gradual increase, of unrest among the 
workers of all civilized nations. This was due to a 
variety of causes, some of which date back to the 
great French Revolution. 

That mighty upheaval was brought about by the 
intellectual movement! of the eighteenth century 
which had slowly but surely undermined the faith 
of the masses of the people in revealed religion and 
in the divine right of kings and nobles. This pro- 
cess had been going on for several generations un- 
til it had completely sapped the foundations of the 

old feudal system and it needed only a spark to 
cause its overthrow. 

These two beliefs were the moral foundation of 
the old regime which secured it unquestioning obe- 
dience on the part of the people and gave it that 
stability which comes only from the perfect harmony 
between social consciousness and political and eco- 
nomic systems. 

We must clearly recognize the fact that ever since 
that great revolution which profoundly unsettled 



INTRODUCTION 5 

the minds of men, that stability has not existed in 
our modern society and there has been a rising tide 
of democracy all over the world, and a constant 
agitation of new ideas of all kinds, good, bad, or 
indifferent, constructive or destructive, judicious or 
impracticable. 

These ideas now find eager listeners among all 
the people. The tremendous development of 
power- driven machinery has concentrated large 
masses of industrial workers in cities. This has 
brought large numbers of them into daily contact 
with each other where they can discuss the prob- 
lems of the day. It has increased their mental alert- 
ness, improved their education, facilitated their ac- 
cess to sources of information, enabled them to form 
effective unions and fraternal societies to protect 
their interests and increase their solidarity and, 
above all, has multiplied production many fold, 
which as a natural consequence has also greatly 
increased wages. 

All these factors combined have considerably in- 
creased the social influence and political power of 
the masses of the people, but it has also filled them 
with new ambitions and new desires and has opened 
their ears to the whisperings of discontent and the 
grotesque flattery of demagogues. 

Coincident with this, there has been a concen- 
tration of enormous wealth in the hands of a few 
and an increase in the class of the idle rich enjoying 



6 INTRODUCTION 

unearned incomes who have not always used their 
good fortune with moderation, dignity, or good 

sense. 

All this seems unfair to those whose shoulders 
bear the brunt of industry and who contribute real 
toil for the wages which they receive out of pro- 
duction. 

It was easy therefore for agitators to point out 
that there are special privileges in our present eco- 
nomic system which discriminate against the pro- 
ducing masses and that the workers could by acting 
collectively abolish these and thereby increase their 
own prosperity. Also they could secure for them- 
selves the full product of their labor by having the 

state controlled by them, own and operate all the 
means of production and distribution. This pro- 
gram is attractive and has considerably fanned the 
smoldering embers of discontent. It is a part of 
the thought in the background of much of our in- 
dustrial warfare. 

This presents a real danger today which cannot 
be lightly cast aside. It is extremely foolish for us 
to attempt to ignore these changed conditions. Judg- 
ing from the widespread social unrest, our period 
must be regarded as one of change and it is inevi- 
table that considerable readjustment must take place 
in our institutions before we reach that complete 
harmony between the social consciousness of our 
people and the established order, which is required 
to produce stability. 



INTRODUCTION 7 

The question is, in what direction shall the read- 
justment take place? When we consider the tre- 
mendous importance of the issues at stake and the 
immense mass of human happiness or misery de- 
pending on a right solution of them, even the most 
careless thinketf will perceive the necessity of not 
jumping at any hasty conclusion. 

Every true man owes it to himself and his chil- 
dren to study this question without! prejudice one 

way or the other and to get at the facts as near as 
possible. Arguments that are not sustained by the 
facts are mere rhetoric and amount to nothing what- 
ever. We want the facts and in this treatise I have 
endeavored to present authentic facts and figures 

and to quote the references where they can be seen 
and let the reader form his own conclusions. 

We have been too careless in the past in accept- 
ing plausible eloquence as the truth. This is a mis- 
take. 

It is easy enough to criticize the existing order 
of society; cur institutions in actual operation on a 
large scale are before us and we have grown fa- 
miliar with them and easily recognize defects which 
develop from time to time and which have to be 
corrected, to meet changing conditions. 

But how to do this, presents a much more difficult 
problem. What direction shall the remedy take? 
Shall it be towards greater collectivism or towards 
greater freedom of individuality? In what direction 
do the interests of the working classes lie? 



8 INTRODUCTION 

Can these defects be best eradicated by the com* 
plete overthrow of the present structure of society > 

We must find out, first, whether the present sys- 
tem has such fundamental defects that it is unwork- 
able without great detriment to the masses of the 
people. Second, we must find out whether we can- 
not remedy these defects by the procedure provided 
by the present system of government for such 
changes. 

Third, we must know exactly what we are going 
to put into its place. We must thoroly satisfy our- 
selves that the new system has advantages which 
justify the change and is itself free from other de- 
fects perhaps just as bad. 

In short, before overturning the present system 
we must test the new system with the facta avail- 
able before us. 

The history of revolutions in other countries and 

recently in Russia has convinced every thoughtful 
man that no matter how justified a revolution may 
be at the time, it is nevertheless a mighty convul- 
sion and for the time being at least brings a whole 
nation face to face with appalling ruin and misery 

in which millions of people are sure to perish. 

We cannot afford therefore in a matter of such 
tremendous consequences to make any mistake that 
can possibly be avoided by a careful examination 
of the facts beforehand. 

Moreover, history has clearly demonstrated that 
until a fundamental change takes place in the minds 



INTRODUCTION 9 

of the people, any progress can be no more than 
temporary and superficial and therefore a forcible 
revolution would prove to be not only premature 
but useless. Progress may seem too slow to suit 
many impatient minds, but to be permanent it has 
to be sustained by the public opinion of the great 
masses of a nation and this changes very slowly. 

Moreover, we know by experience that in the long 
run, in spite of all obstacles, public opinion does 
prevail and the ideas of one age become the law 
of the next. Our present system of law is the out- 
growth of the conception of right and justice which 
prevailed among our ancestors and there is no doubt 
whatever that the general ideas of equity of the 
present generation will become the law of the next, 

It is a certainty, capable of demonstration, that 
if any considerable modification of the existing 
ideas of equity should take place among the peo- 
ple of a nation, it would only be a question of time 
until that change would be reflected in their laws. 
Our present system of law is the basis of the estab- 
lished order now, but the law of the future is even 
now being created in our very midst by the prevail- 
ing ideas which recommend themselves to the gen- 
eral mass of our people at present. 

No matter how irrational, impracticable or incon- 
sistent some of these ideas may seem to some of us, 
they are nevertheless a real force to be reckoned 
with and which may prove irresistible in the future. 



10 INTRODUCTION 

It is important therefore that full and free dis- 
cussion shall take place on these subjects, in order 
that true education shall be obtained and sound 

opinions formed. False ideas must be met in their 
own field of thought and confronted with the facts. 
It is a profound mistake to believe that they can 
be suppressed by force, policemen's clubs or jail 
sentences. Force is powerless against an idea. It 
only advertises it. Ideas can only be overcome by 
other ideas more truthful and rational. This is the 
reason for this treatise. I have considered it my 
duty to contribute to the best of my ability to clear 
up these ideas. 

In discussing the question of Socialism vs. Indi- 
vidualism, the first question that arises is, what 
is socialism? How do we define it? This is a 
question difficult to answer, because socialism is a 
general term which embraces widely conflicting 
views. 

Broadly speaking, however, we can say that so- 
cialism is the opposite to individualism. Socialism 
means the abolition of the individual private owner- 
ship of property and replacing it with the common 
ownership of property by having the title of all 
property vested in the state. It means a great in- 
crease of collective action by which the state will 
own and operate all the means of production, dis- 
tribution and exchange, thus subordinating individ- 
ual action almost entirely to the mass action of the 
whole people. 



INTRODUCTION 11 

The central idea is that the people shall seek 

their welfare by collective rather than by individual 
action. The means to accomplish this is, that the 

working people shall by collective action take pos- 
session of the Government, establish their own dic- 
tatorship! and use the power of Government thus 
acquired to accomplish their ends. The chief of 
which is predicated on the proposition "that all 
wealth is produced by labor and therefore should 
belong only to those who toil in its production and 
that the worker shall receive as wages the full prod- 
uct of his labor without any profit being deducted 
from it by anyone/ 

There are numerous shades of opinion among 
those classed as socialists differing from each other 
in some detail. 

To discuss socialism broadly it is necessary to 
begin with Karl Marx because all socialists until 
very recently have been> directly or indirectly his 
followers and have based themselves on his teach- 
ing. 

When I began writing this treatise, I was imbued 
with many radical ideas and I felt impelled to dem- 
onstrate their truth. But when I came to dig into 
the facts I was much surprised to find them quite 
different from what I had believed them to be. 
Facts are stubborn things which cannot be ignored 
and will not down at our bidding. Loyalty to the 



12 INTRODUCTION 

truth makes it my duty to give the results of these 
researches to the public. 

WM. PRESTON HILL, 

4541 Gibson Ave., St. Louis, Mo. 

The great English scientist, Thomas Huxley, 
said: "Sit down before a fact like a little child; be 
prepared to give up every preconceived notion; fol- 
low it wherever or to whatever it may lead you — or 
you shall learn nothing/ 



CHAPTER L 
KARL MARX, THE FOUNDER OF SOCIALISM. 

Karl Marx in collaboration with Engels may be 
called the founder of "the International socialist 
movement," and his work "Capital" has become 
the bible of the socialists. I say bible because mul- 
titudes have accepted it with a sort of semi-religious 
exaltation. In that state of mind, faith is the con- 
trolling emotion and reason is not active. 

The general impression of his followeis is thaf 
Marx was the creator of his ideas and a sort of in- 
spired prophet. This sentiment has been best ex- 
pressed by Achille Loria, professor of political econ- 
omy at the University of Turin, and the foremost 
protagonist of socialism in Italy. In his work on 
Marx he says: 'Whatever judgment we may feel 
it necessary to pass upon the doctrines it enunciates 
it will remain for all time one of the loftiest sum- 
mits ever climbed by human thought; one of the 
imperishable monuments to the creative powers of 
the human mind." 

To any serious student this statement can only 
appear to be a wild exaggeration. The truth is 
that Marx showed little creative power of his own, 
because few of his ideas were original with him. 
Most of the ideas set forth in his "Capital" or 
in any of his other works were discussed at length 



14 SHADOW OR SUBSTANCE 

by writers who preceded Marx many years, even 
back as far as Plato, especially by the English writers 
Godwin, Hall, Thompson and Hodgskin. Even his 
much-discussed theory of surplus value was origi- 
nated by William Thompson and thoroly elucidated 
in his book* published in 1S24, when Marx was 
only 6 years old. 

In some of his earlier works Marx mentions these 
English writers and shows that he was fully ac- 
quainted with their works; but in his "Capital" he 
does not give them credit for the ideas he bor- 
rowed from them. 

Moreover, Marx when he was 30 years old in 
January, 1 848, in collaboration with Engels issued 
the famous "Communist Manifesto." Engels had 
been in business in Manchester where he had become 
acquainted with the English socialist writers, had in 
the main adopted their doctrines, and of course he 
must have acquainted Marx with them in writing 
the manifesto. 

Marx spent all the balance of his life, up to the 
time of his death 35 years later, in writing his prin- 
cipal book, "Capital," and left it unfinished at his 
death. 

Comparing it with the "Communist Manifesto," 
we find that altho "Capital" contains an immense 

♦Inquiry into the Principles of <the Distribution of Wealth 
most Conducive to Human Happiness, by William Thompson, 
Longman & Co. — London, 1824. 



SOCIALISM OR INDIVIDUALISM 15 

mass of details more or less relevant not contained 
in the Manifesto, yet the latter contains all the essen- 
tial principles contained in the former except one, 
the theory of surplus value. 

* 'Capital" only gave those ideas more body and 
weight by multiplying examples and illustrations. 
So that in 35 years Marx only added one idea, 
which he found good and borrowed from William 
Thompson's work, to the ideas he had at 30 years ot 
age. Most of his time for 35 years was spent in the 
British Museum patiently and laboriously digging 
up facts to strengthen his indictment against the ex- 
isting order of society. The conclusion is frresistible 
that Marx formed his ideas when he was a young 
man and spent all the balance of his life, not to 
learn anything new or to discover the truth but sim- 
ply to dig up facts to strengthen the opinions he 
already held and to prove his case. 

But nevertheless Marx and Engels for the first 
time assembled a compact, coherent body of social- 
ist doctrine sufficiently plausible to dominate the 
minds of multitudes of men, and issued it just at 
the right moment, in January, 1 848, only a month 
before the revolution broke out in Paris. They thus 
became the founders of the modern socialist move- 
ment and Marx with his "Capital" became its 
prophet. 

"Capital" is almost entirely a terrific indictment 
of the institutions existing at the time Marx began 



16 SHADOW OR SUBSTANCE 

its writing in the early days of power-driven ma- 
chinery with its extreme and irresponsible individ- 
ualism. 

Marx devotes page after page, chapter after chap- 
ter of almost the entire book to the facts he ac- 
cumulated to prove that what he calls " 'Capitalism* ' 
is damnable. It is this constant repetition over and 
over again which exercises its hypnotic spell on the 
minds of its readers and goads them into fury until 
finally they are in a frame of mind to say, "Away 
with this horror, we are ready to accept anything 
in its place.' 

Out of this interminable mass of horrible exam- 
ples, Marx scarcely condescends to devote a few 
paragraphs to prove that socialism would be a good 
thing for the new order of society. He assumes the 
role of a prophet and predicts that socialism must 
come inevitably, good or bad. whether the people 
want it or not. 

He prophesies that capitalism will break down 
by the sheer force of its own evils, and that then 
socialism will rise up in its place just as the butter- 
fly, at a certain stage of its development, emerges 
from the debris of its previous existence as a chyrs- 
alis. 

The Materialistic Interpretation of History. 

His prediction is founded on what he calls the 
"Materialistic Interpretation of History,* 1 by which 
he seeks to show that the origin of all our ideas. 



SOCIALISM OR INDIVIDUALISM 17 

philosophies, laws, institutions and even religions 
can be traced to the material economic conditions 
in which th'i people have lived. 

This is a generalization much too broad to stand 
the test of scrutiny and reason. No doubt the eco- 
nomic conditions have had considerable influence 
in shaping our laws and institutions, but on the con- 
trary it can with equal truth be said that ethical ideas 
and religions have also had a profound influence 
in shaping the economic structure of society. It is 
in the domain of thought that the change first takes 
place which determines what the future society 
shall be. 

It was the advent of the new religion, Christian- 
ity, which at first made its way slowly among the 
slaves, the lowly and the oppressed, which over- 
threw the old pagan society and determined the 
future of the Roman world. 

It was the ethical teachings of Confucius and 
Laotsze, 2000 years ago which determined the fu- 
ture structure of China. 

It was the religion of Mahomet that shaped the 
destinies of the greater part of Africa, Asia Minor 
and Hindustan. 

And finally, it was not the economic conditions 
of the Middle ages which produced the reformation, 
but on the contrary it was that intellectual revolt 
which was the real creator of our modern conditions. 



18 SHADOW OR SUBSTANCE 

Whatever opinions one may entertain of Luther's 
doctrine, I think that every one will agree that, when 
he nailed his thesis on the door of the church, he 
started something which profoundly altered the in- 
stitutions of Europe. 

Marx showed a strong inclination to prophesy 
in his book and there is no doubt that he sincerely 
believed that all the phenomena of human society 
could be grasped and the future predicted like a 
simple mathematical equation, but time has demon- 
strated that he was wrong both in his premises and 
conclusions. He was a false prophet who predicted 
many things, none of which have ever happened in 
the way he expected. 

The Law of the Concentration of Capital. 

He announced this law, and basing himself on 
that, he predicted that capital would concentrate 
**self in constantly fewer hands, that the number of 
capitalists must diminish as the magnitude of enter- 
prises increased, that the smaller capitalists would be 
continually broken and driven into the ranks of the 
proletariat, until, in the course of time there would 
be numerically only a few large capitalists left on 
the one hand against the great mass of the working 
class on the other. He predicted that the same 
process would take place in land ownership. 

All these arguments Marx founded on the sup- 
posed "iron law of wages'* which he accepted from 
Ricardo, the English economist, as the gospel truth, 



SOCIALISM OR INDIVIDUALISM 19 

out which time has demonstrated to be false and 
which has been discarded by all leading economists 
today as untenable. 

It is true that big businesses have grown bigger, 
but yet the number of shareholders in them has 
continually increased instead of diminishing. More- 
over, the number of smaller firms, instead of being 
wiped out, has also increased enormously and new 
ones are being added every day. 

So that the actual number of capitalists has mul- 
tiplied many hundred times instead of dwindling 
to a few as Marx predicted. Also the wage earn- 
ers who were, according to Marx, going to remain 
inevitably at the bare level of subsistence and even 
sink lower and lower, have instead benefited greatly 
by the general increase of wealth, and their wages 
and general well being have been enormously im- 
proved. So that many classes of workers have in- 
comes greater than most teachers, preachers, pro- 
fessors, lawyers, bookkeepers, clerks, etc., and con- 
sider themselves well off, by comparison. 

The Law of Class Conflict. 

Marx also announced this law, by which he 
claimed that the economic interests of the work- 
ing classes were sharply opposed to that of 
the capitalist class, and he predicted that this would 
continually become more and more pronounced un 
til every man would be either wholly the one or 
wholly the other. He claimed that the working 



20 SHADOW OR SUBSTANCE 

class, overwhelming in numbers, would be forced 
by the imperative urge of their economic class in- 
terests, to combine, first locally, then nationally, 
then internationally. Then Marx said they will be 
victorious. Nationalities will disappear. The work- 
ers will then decree that all land and capital shall 
be owned in common (to-wit: All private proper- 
ty shall be confiscated by the state). There will 
then be only one class left in the world, the working 
class, and all men will then be (like the heroes in 
a novel) happy and free forevermore. This is his 
vision of Utopia. I believe that we can easily dem- 
onstrate that in the socialist state men will be neither 
free nor equal, and that they will be actually less 
free and less equal than they are under the present 
system. 

Marx did not prophesy correctly in this respect. 
The sharpness of the class warfare, far from increas- 
ing, has not been even maintained and has tended 
to diminish. There is no clear-cut line of division 
between capitalists who have everything and work- 
ers who have nothing. There are many intermediate 
classes between the very rich and the poor. There 
are hundreds of thousands of small employers, 
store-keepers, etc., who are not capitalists to any 
extent, neither do they belong to the working class 
altho they work, and there are other thousands of 
workers who are to some extent capitalists or own 
their own home or other property, and thousands 



SOCIALISM OR INDIVIDUALISM 21 

of others who own some landed property or farms 
who cannot be classed as either capitalists or pro- 
letarians. Altogether it is impossible to divide the 
people into two sharply distinct groups. 

Even in Germany, where Marx's theories found 
the most adherents, the enormous and general in- 
crease of wealth just before the war among all 
classes of the people compelled his followers to re- 
vise their belief in this part of his prophecy. 

Moreover, nowhere has nationalism tended to 
give way to internationalism among the workers, 
as the late war has shown conclusively. And it is 
precisely in the countries with the greatest develop- 
ment of capital that the workers command the 
highest wages and the general mass of the people 
enjoy much greater and more general well-being 
than in the countries! with less capitalism. It is rea- 
sonable to believe that the still further development 
of capital, in any nation, will still further increase 
the general welfare therein. 

Therefore capitalism is in no danger of breaking 
down of its own weight, and when socialism came 
accidentally, it came into Russia, the least devel- 
oped capitalist country, and as a result of the com- 
plete break-down of all civilization due to the war, 
and not as a result of the high development of cap- 
italism. 



22 SHADOW OR SUBSTANCE 

The Advent of Communism in Russia. 

Finally, when communism triumphed in Russia, it 
was not due to the over development of capital, 
but actually to the destruction of it and the complete 
collapse of their economic life due to the terrible 
strain of the war. Communism followed in the 
wake of the war even as those other twin scourges 
of the human race, famine and pestilence, have 
always followed it, and for the selfsame reasons. 
And communism, far from restoring the economic 
life of the nation and bringing back prosperity and 
happiness to its people, has actually fanned the 
flames of pestilence and famine into a mighty con- 
flagration in which millions of people are even now 
perishing. 

It has aggravated the ordinary distress usual 
after a war into an appalling catastrophe, and it 
has done it for the reasons I shall point out and 
which could have been easily predicted by any 
thoughtful man and which were in fact actually pre- 
dicted by several great writers long ago; notably 
by Pierre Joseph Proudhon, a French philosopher 
and writer of great originality, in his "Resume of 
the Social Question" and in his "General Idea of 
the Revolution of the Nineteenth Century;" also 
by Herbert Spencer, the renowned English philos- 
opher, in his "Coming Slavery,* and by Frederick 
Mathews, an English writer, in his "Taxation and 
the Distribution of Wealth,* published just before 
the war. 



CHAPTER II. 

COMMUNISM 

After his terrible indictment of capitalism Marx 
offers us a remedy. He said his program can be 
stated in a single sentence : 

The dictatorship of the proletariat, abolition of 
private property and communism. 

Many people believe that there is considerable 
difference between bolshevism, communism and so- 
cialism and that socialism, for instance, does not 
aim at complete communal ownership and operation 
of all property, 

It is true, that there are very many different 
shades of opinion among socialists on this subject, 
and that there are some of them who only advo- 
cate that the state shall own and operate the most 
important means of production and distribution 
with which the great mass of the people come into 
contact, and shall leave a considerable amount of 
private property in individual ownership. 

And there are vtzry many others who have no 
sharply defined and clear cut ideas on this ques- 
tion and simply deceive themselves and others with 
hazy, indefinite notions and assertions. 

But Marx himself had no illusions on this point. 
He knew, as everybody who has studied the ques- 



24 SHADOW OR SUBSTANCE 

tion fundamentally knows, that it is impossible to 
confiscate the major part of all the property of a 
nation and at the same time leave here and there 
scattered portions of it in private hands. 

Two Systems of Property Ownership* 

Speaking fundamentally and on broad general 
lines, there are only two great systems of property 
ownership possible. First, ownership by individ- 
uals; and second, communal ownership by the state, 
community, municipality, group or tribe. 

The system of property ownership which now 
prevails in all the civilized nations (except Russia 
under bolshevism), is the ownership of property by 
individuals, with the occupation, operation and use 
of the same by individuals. It is well for readers 
to keep this definition in mind and to grasp its full 
meaning, because much of the discussion of this 
subject hinges on that point and is made simple by 
a clear understanding of this fundamental. 

I am aware that even under the present system 
we have invented ways by which several individ- 
uals can own a piece a property together, as when 
several persons combine to buy a property and 
have it conveyed to them jointly, each one owning 
thereafter an undivided interest in the same; and 
we also have a modified form of family ownership 
where a property is conveyed to a husband and wife 
jointly for life with the remainder in their children 



SOCIALISM OR INDIVIDUALISM 25 

after death; and we have ownership in common by 
large groups of individuals where they form a cor- 
poration with thousands of shares and the corpora- 
tion owns and operates large properties. 

In all the above instances, the individual's right 
is recognized and he can separate his interest from 
the group by selling it. 

We also have under the present system true com- 
mon ownership by groups of individuals banded 
together for a mutual purpose, such as religious and 
monastic orders and various co-operative or be- 
nevolent societies in which the ownership is in the 
society and the right of the individual is not recog- 
nized only in so far as he is a member of that so- 
ciety. The difference of nation-wide communal own- 
ership from all the above is considerable, because 
under it the individual's right is so completely lost 
sight of as to be practically obliterated. Under it 
the individual has no feeling of ownership what- 
ever. 

Therefore when Plato, the original Utopian, and 
all those who have followed him, decided that pri- 
vate property and the selfishness which usually ac- 
companies it, was responsible for many of the evils 
of society, they did not have much to choose from. 
The only alternative to private property, as they 
thought, was common property, and all Utopians 
from Plato down to Marx, Bakunin and Kropotkin 
have had to make the same choice. 



26 SHADOW OR SUBSTANCE 

But in modern times we have discovered that 
there can be two variations of these two systems 
of property ownership in regard to its occupation, 
use and operation. 

The first is that we can have the title of prop- 
erty held by individuals and at the same time have 
the same occupied, used and operated by the com- 
munity. 

It is evident that this variation can in the very 
nature of things only be a temporary expedient 
when a transition from private to public ownership 
is being made. 

The second variation is to have the title of the 
property vested in the community as a whole and 
have the same used, operated and occupied by in- 
dividuals under temporary leases, grants or licenses. 

This last variation has been especially advocated 
by Henry George, limited, however, to property in 
land only. He urged that the rights of individuals 
td the occupation and use of land remain undis- 
turbed just as it is at present, but that the actual 
ownership should be practically resumed by and 
be vested in the state, representing all the people, 
using the power of taxation as a weapon to accom- 
plish this purpose. I have discussed this at length 
in another work. 

Marx, therefore, when he decided with Plato and 
all the other Utopians that private property must 



SOCIALISM OR INDIVIDUALISM 27 

be abolished, naturally had to choose the same 
alternative which tliey all did, namely, common 
property. 

He did not attempt to analyze it. His mind vraa 
so filled with hatred of the existing order th^t he 
took it for granted that the opposite system must 
be the true one and he devoted only a few para- 
graphs to announcing that it must come. 

If he had devoted the same energy to analyzing 
communism that he did to discovering bad exam- 
ples of capitalism, he would have been less en- 
thusiastic about his Utopia. 

Properly and Communism* 

When a man exerts himself to produce something, 
the motive that impels him is the desire to use or 
possess the thing produced. This product is what 
we might call the natural reward for his labor. He 
feels and the common opinion of mankind has rec« 
ognized that this should/ be his as against all the 
world. This is the basis of private property and 
this desire to produce and possess things is one of 
the elements of our human nature and has been the 
mainspring of civilization. 

In property every man finds the proportionate 
recompense which justifies his labor. We speak of 
liberty and property together because a man could 
not be free if he is not allowed to own that which 



28 SHADOW OR SUBSTANCE 

lie produces and to freely sell or exchange it for 
other things which he wishes. 

To be free means that a man owns himself, that 
his powers of mind and body are his very own, as 
against all the world and that from this ownership 
of himself by himself, springs his right to own the 
things which he has made a part of himself by his 
labor. 

A slave under the law of slavery does not own 
himself, he is declared by that law to be the prop- 
erty of another man, his master, and therefore he 
did not own the things which his labor produced. 
In economic termd a slave was defined to be a per- 
son who was forced to labor for another and to 
give up to him all the products of his labor. 

The ownership of property therefore is the very 
foundation of our whole economic structure and 
in its broad simple terms is easily understood. 

But when we come to trace it through all the com- 
plexities of our modern industrial system, the con- 
nection between a man's work and the things he 
produces is not so clear and definite. 

In the factory a man works for another man, th£ 
owner of the enterprise, who pays him wages for 
his labor and keeps the actual product for him- 
self, out of which he of course hopes to and usually 
does make a profit 



SOCIALISM OR INDIVIDUALISM 29 

The Theory of Surplus Value. 

It is this profit that Marx objected to. He 
claimed that it represented the power of exploita- 
tion which the employer had by reason of his mo- 
nopoly of capital and land which enabled him to 
take the lion's share of the production and that 
the laborer was forced by his poverty to sell his 
labor for a pittance barely sufficient to keep him 
alive. In short, that the laborer was practically 
what he called a wage-slave (differing but little 
from a chattel-slave)? inasmuch as he was forced 
to work by the pressure of his economic condition, 
and that nearly all the product of his labor did not 
belong to him but became the property of the cap- 
italist employer, who thus became rich by appro- 
priating the fruits of the labor of all those who 
worked for him. 

This, according to Marx, represented the eco- 
nomic ascendency of capital, the power it has to 
squeeze unearned income from the toil and sweat 
of the workers while at the same time it sinks them 
into hopeless poverty. This is briefly stated, his 
theory of "Mehrwert" or surplus value, which he 
adopted from William Thompson. 

This contention, at the time Marx made it, was 
partially true, but he was mistaken in ascribing it 
to the possession of both capital and land by the 
employers. Capital in itself has no tendency what- 
ever to depress the wages of workmen, because it 



30 SHADOW OR SUBSTANCE 

multiplies the enterprises which must have work- 
men and often employs thousands on a single acre 
of space and thus directly relieves the pressure of 
population on land. 

But the monopoly of natural resources does tend 
to depress the wages of the laboring classes, be- 
cause the moment all natural resources pass into 
private ownership, it shuts them out from the pos- 
sibility of working for themselves. They then no 
longer have any choice left. They must work for 
someone who will employ them or starve. Under 
these conditions they no longer can make the free, 
uncoerced bargain about their employment which 
they would be able to make if they had the alter- 
native of making a living for themselves on some 
natural resource. This condition does undoubtedly 
exert indiiect economic pressure on the masses of 
the people. 

But Marx failed to figure out that the workers 
would more than offset this disadvantage by setting 
up a monopoly of their own by theif unions. A 
labor union is a monopoly pure and simple, because 
it restricts the supply of that particular kind of 
labor, and, by forcing collective bargaining, pre- 
vents any individual from accepting less than the 
scale of wages fixed by the union, also by the union- 
label, by solidarity with other unions, boycotts and 
other violence against non-union workers it is able 
to maintain an effective control of its particular field 



SOCIALISM OR INDIVIDUALISM 6k 

of labor and force the employers to pay wages 
higher than would obtain under competition. 

The true test of a monopoly is the fact that it 
compels those who deal with it to pay it tribute in a 
price which is greater than that which they would 
pay if the monopoly did not exist. 

Monopoly, as the French philosopher Proudhon 
so wisely remarked, is what everybody strenuously 
objects to when somebody else has it, but which 
each one strives as hard to secure for himself. 

The laboiing classes, therefore, met the disad- 
vantages which they suffered from the monopoly 
of the land by setting up a more direct and effective 
monopoly of their own. They were aided in this 
by the further development of capital, which mul- 
tiplied the industries requiring labor and made the 
labor unions more powerful and by making a more 
intensive use of land lessened the power of land 
monopoly. 

Nevertheless, Marx formulated a plausible and 
alluring theory that seeks to find the blame for our 
great; inequalities of wealth, and other social ills, 
in our economic structure itself. It plays on that 
trait of human nature that makes us inclined to 
blame everybody and everything else rather than 
ourselves for our condition. It must be indeed very 
soothing to multitudes of people to believe that they 
are poor not because they are ignorant, lazy, shift- 



32 SHADOW OR SUBSTANCE 

less, inefficient or stupid, but because of the work- 
ing of some mysterious economic forces beyond 
their control. And it is also no doubt very attract- 
ive to believe that all we have to do, is to change 
that complicated structure instead of ourselves, and 
we will all immediately enjoy the blessings of pros- 
perity forever more. 

Nothing to Lose but Their Chains 

This is the powerful appeal that Marx held out 
to his followers. With dramatic force he said, 
"Workers of the world, unite; you have nothing to 
lose but your chains, and a world to gain." 

This thrilling slogan sounded plausible enough in 
some countries like Russia, where an unintelligent 
despotism seemed to hold the laboring masses, fig- 
uratively speaking, in economic serfdom, but it was 
utterly false even there. The millions of Russian 
workmen have found out that they had much more 
to lose than the fetters of the Czar. Millions of 
them lost their lives, millions lost even the small 
measure of comfort, security and steadiness of em- 
ployment which they had under the Czar. Millions 
found out that in the chaos of revolution even the 
bread of their wives and children disappeared and 
left them to perish from chronic hunger and dis- 
ease. Millions lost even the little liberty they had 
under the Czar of choosing their own time, place 
and kind of work and place of residence and found 



SOCIALISM OR INDIVIDUALISM 33 

the new and heavier chains of drafted compulsory 
labor and the tyranny of petty dictators forged 
upon them. 

Decidedly the workmen even of Russia had much 
to lose besides their supposed chains. The workers 
of more highly developed industrial nations would 
have much more to lose. They are the chief ben- 
eficiaries of the industrial plant of a nation and the 
more highly developed! this is, the better is their 
general condition. But, on the other hand, they 
also have more to lose from a breakdown of this 
industry. 

Some figures on the ownership of wealth in the 
United States recently compiled are instructive on 
this point. It shows that the farmers of this coun- 
try, numbering 6,561,502, own $41,000,000,- 
000.00 That 5,250,000 persons own homes and 
other real estate in villages, towns and cities esti- 
mated at $20,000,000,000.00. 

Fifty million people individually and through in- 
surance companies, trust companies, savings banks, 
fraternal societies and other forms of ownership 
own the railroads, electric lines and other public 
utility companies. According to the latest report 
of the Comptroller of Currency of the United States, 
there were: 

Savings Accounts 

In national banks 8,109,242 

In mutual savings banks 9,445,327 



34 SHADOW OR SUBSTANCE 

In stock savings banks 1,118,583 

In postal savings department 466,109 

In trust companies 4,035,422 

In state (commercial) banks 8,184,163 

A total of 31,358,846 savings accounts in the 
United States or an average of more than one to 
each family, with a total deposit of $5,500,000,- 
000.00 and there are also 4,500,000 of sharehold- 
ers in building and loan associations, whose ac- 
counts are growing by regular deposits every month, 
and which at maturity will amount to over $10,- 
000,000,000.00. 

There are other thousands who are buying gilt- 
edge securities on the installment plan; or paying 
off mortgages by monthly payments. 

It took just 1 00 years to brin^ the total num- 
ber of individual savings accounts up to twenty- 
two millions (1916). But in five more years nine 
million more accounts were added. The 1921 sav- 
ings census quoted above was taken during the low 
point of the depression. 

There are 2,000,000 who own stock and bonds 
in industrial enterprises such as United States Steel 
Corporation, tire and auto companies, etc. Sev- 
eral million people own United States Government 
bonds issued during the war and other state, county 
and municipal bonds.* 

*I have chosen the above facts from the U. S. Census because 
it is well known to be reliable and impartial. Those who wish 



SOCIALISM OR INDIVIDUALISM 35 

And this is not all; millions of dollars are in- 
vested in highways, which belong to all the people, 
and millions in our school system, in public parks 
and buildings, swimming pools, baths, libraries, hos- 
pitals and many other forms of public property 
which are owned by all the people and is for the 
use and benefit of all alike. It is perfectly evident 
from these facts that this country belongs to the 
many and not to the few. It is however true that 
a disproportionate share of our national wealth is 
owned by a comparatively small percentage of our 
people. In this connection some wild statements 
have been repeated so often that they have come 
to be accepted as the truth, namely, that one per 
cent of our people own ninety per cent of the na- 
tional wealth. 

This is so manifestly absurd that it needs no refu- 
tation. The actual facts are sufficiently serious, 
however, without exaggeration. They show that 
about 10 per cent of our people own between 60 
and 65 per cent of the nation's wealth. This is a 
problem that will require our most careful consid- 
eration. 

It is not so much the wealth accumulated by the 
genius and hard work of the original founders of 
the fortunes which is detrimental. 

to pursue this line of thought further should read "Income in 
the United States," published by the National Bureau of Eco- 
nomic Research, and they will find much more evidence of the 
same nature, and better digested and brought down to and in- 
cluding 1919, which is ten years later than the census from 
which I have quoted. A careful reading of that treatise will 
convince anyone that I have been very moderate and modest in 
choosing my facts. 



36 SHADOW OR SUBSTANCE 

The harm comes from the tendency to create 
huge trust estates self perpetuating under able man- 
agement which continue to shield the beneficiaries 
from every vicissitude of fortune and even from the 
consequences of their own folly or incapacity, This 
too frequently has had the result of creating a clas9 
of luxurious idlers of little benefit to themselves or 
to the nation. 

It is probable that we will have to revise to some 
extent our laws regulating the transmission of prop- 
erty from one generation to another, and also our 
inheritance taxation so as to bring about a better 
distribution of wealth and at the same time bring 
this class back within a reasonable time to the 
necessity and stimulation of useful work. 

This will be in reality a blessing to them instead 
of a hardship. The original American idea that 
there should be only a few generations from shirt 
sleeves to shirt sleeves is not a bad one. We can 
accomplish this with our present laws without any 
disturbance whatever to our productive industry. 

I refer only briefly to this phase of the subject be- 
cause it would take too much space to treat it fully. 
It has been ably discussed by several writers, no- 
tably by Harlan E. Read. Without subscribing to 
some of these extreme views, the facts which they 
present are worthy of careful study and considera- 
tion* 

*The Abolition of Inheritance, by Harlan E. Read. McMillan 
& Co., New York. 



SOCIALISM OR INDIVIDUALISM 37 

After all, up to the present time, most of the 
wealth which has fallen into the hands of the com- 
paratively small number seems to be the superlative 
result of the tremendous energy and youthful exub- 
erance of our nation developing our very great nat- 
ural resources. We cannot afford to put a damper 
on this or repress it in any way. Our only con- 
cern need be that conditions of great inequality 
shall not be perpetuated for generations by careless, 
short-sighted or unwise laws. 

But the share of wealth owned by the 90 per cent 
of our people, though apparently small when ex- 
pressed in percentages, is nevertheless a very sub- 
stantial sum of about 80 billions. This is as great 
as- the total national wealth ©f most of the other 
great nations of the earth and about as great as our 
total national wealth was 20 years ago. 

It is extremely absurd, therefore, to tell the over- 
whelming majority of the people of this country 
that they have nothing to lose from the overthrow 
of the existing industrial system. 

Marx's idea was that the few whom he called 
the exploiters were the only ones who could lose 
anything. 

I will take up this matter of exploitation a little 
later. Just now I wish to follow Marx's plan to 
secure to the workers the full product of their labor. 



38 SHADOW OR SUBSTANCE 

Labor Under Communism. 

Under communism every worker will work for 
the state and the state (not he) will own the prod- 
uct and will distribute it according to the needs of 
the people. This will be done as the chief officials 
judge it to be for the best. The great idea, of 
course, will be that nobody shall be allowed to make 
a profit and that, in this way, all that the people 
produce will go back to them without any rake-off 
subtracted by parasitic capitalists. Therefore all 
the commodities, food, clothing, etc., will be placed 
in the storehouses of the state and distributed to the 
people by cards or otherwise according to their 
merits, or more often according to their needs. 

But who is going to decide all this? Who shall 
determine what kind of work the people shall do. 
what kind of commodities the state is most in need 
of, what kind of production shall cease in order 
that other more necessary articles be produced? 
All these extremely complicated problems in a na- 
tion of 100,000,000 people require a tremendous 
grasp of details far beyond the capacity of any one 
man or group of men. It would require a very 
large organization with ramifications everywhere to 
keep in touch with the needs of the nation. 

Marx says that of course we will elect these rep- 
resentatives of the people, who will have charge of 
all this. Very well, let us concede for the moment 
that we will elect good men, which we have not 



SOCIALISM OR INDIVIDUALISM 39 

always done, and that they will do their best, which 
they seldom do. 

Now, factory production cannot go on efficiently 
and smoothly if every man is left free to select his 
own task and do it as he likes. There must be 
overseers in command who shall see that every 
man does what he is told and does it in co-ordina- 
tion with the other workers. 

In an army we have an officer for every dozen 
or so privates, but an army is a simple organization 
compared to a great industry. A foreman, in the 
latter, must not only have the power to make his 
men do the allotted task, he must also determine 
the fitness of his men for the job given them. These 
foremen, of course, cannot be elected by the men 
immediately under them, because in that case they 
would have no authority whatever. They must be 
appointed by the chiefs higher up. 

To control millions of workers we will have to 
have more than a million of petty foremen, under 
the command of greater chiefs higher up, and over 
all will be the great national leaders. We begin to 
see the outlines of a powerful organization. 

Now the men working under these petty fore- 
men must obey orders or the whole scheme fails. 
If they refuse, or do it badly, they cannot be dis- 
charged, because there is no place to discharge them 
to, under communism; they must therefore be com- 



40 SHADOW OR SUBSTANCE 

pelled to do it by punishment in some way. The 
condition of the ordinary individual under com- 
munism therefore will be that he will belong to a 
group under a foreman who will determine what he 
is fittecT for, what he shall do and how he shall do 
it, and with power to make him do it by punish- 
ment and fix his compensation according to his es- 
timate. Moreover, he will have no way to get any- 
thing except from the state and if his food card 
is withdrawn from himself and his family he and 
they will surely starve. He would also have to 
live where another boss shall appoint. 

Socialist writers have cheerfully informed us that 
under socialism there will be no sore-eyed book- 
keepers nor husky, able-bodied shoemakers. If L 
for instance, desired to devote myself to medical 
science and the petty boss over me decided that I 
was only fife to dig ditches, I would have to dig 
ditches or starve. Would I in that case do it wil- 
lingly or well? If then he decided that I was not 
worth much as a ditch-digger and that I must re- 
ceive no more than I deserved, what would I have 

NOTE — This is not mere imagination. It actually oc- 
curred. Dr J. William Lambie a native of Hammond, 
N. Y., graduated in dentistry at the University of 
Pa., settled in Russia 33 years ago. He became wealthy 
as the dentist of the late Grand Duke Michael. After 
the Revolution, the Bolsheviki confiscated all his for- 
tune and put him into jail for months. Then on releasing 
him, because guiltless, they decided that his services as 
dentist were not needed and they put him to work 
scrubbing floors, a poor scrubman, he gets barely suf- 
ficient to maintain life. His sister, Mrs. S. C. Mc- 
Lennan of Syracuse, N. Y. through our department of 
State is trying to secure his release and return here. 



SOCIALISM OR INDIVIDUALISM 41 

in life that the slave did not have? 

Under these conditions will the common man be 
free or will he come under the definition of a slave? 

And if this petty boss conceives a grudge against 
him (as we know they sometimes do), will he not 
have the power to satisfy his spite and will he fail 
to do it? 

Will the common worker be on an equality with 
his petty boss or all the other bosses? 

Communism therefore is compelled to resort to 
compulsory labor, to an industry determined and 
dictated by political bosses, to an arbitrary and 
capricious distribution of goods, to a predetermined 
and arbitrary mode and place of living and to the 
tyranny of millions of petty bosses either appointed 
or elected by ballot 

Marx's piomises therefore were to make the 
working people equal, independent and free by 
abolishing private property; but the actual result 
of his scheme has been to substitute for it a system 
that establishes universal slavery and the most in- 
tolerable inequality and injustice. 

But this is not all. The most immediate and dis- 
astrous result of communism is to strangle produc- 
tion. 

Communism Strangles Production. 

When we destroy a man's ambition by making 
it impossible for him to own anything of his own or 



42 SHADOW OR SUBSTANCE 

to get ahead in any way, no matter how hard he 
strives, we at once take away from him the incen- 
tive to work. He becomes an unwilling worker, 
with all which that implies. Homer, the ancient 
Greek, said: 'The day that makes a man a slave 
takes half his worth away.* Under communism 
the good will of his boss is more important to a 
worker than anything he can do for himself. 

This was the economic defect of slavery. Slaves 
did not produce with intelligent, willing hands. 

Moreover, great industries are usually built up 
by the courage, energy, perseverance and thrift of 
some one man. Such men are the product of an 
environment of liberty, of individual initiative and 
struggle against circumstances and competitors. 
They are spurred on by ambition to secure a great 
reward, and under our existing system they some- 
times get it (if they succeed), but we say nothing ot 
those who fail. Communism could never develop 
such exceptional men because it offers them nothing 
to stimulate their ambition and the whole atmos- 
phere of government control and regulation is fatal 
to individual enterprise and energy. If in spite of 
all handicaps under communism such a man should 
appear, he would still have over him some political 
boss who has been elected more by popularity than 
by merit and whose product is eloquence rather 
than goods. 

But without these captains, industry languishes 



SOCIALISM OR INDIVIDUALISM 43 

and production dwindles. Moreover, they are the 
very ones who, according to Marx, were exploiting 
the working class and getting rich by making a profit 
out of their labor. "Away with them, he says. Com- 
munism must destroy these enemies of trie people 
in order that the workingman shall at last get all 
the product of his own labor." 

That is what actually happened in Russia. They 
murdered thousands of these factory owners, man- 
agers and experts and drove other thousands into 
exile, under the delusion that only those who 
work with their hands were producers, and 
they put the workingmen in charge of the works. 
And then they discovered that the ignorant agi- 
tator could not run the factory, that production did 
not thrive, that the surplus disappeared as if by 
magic and quickly reduced the individual worker 
to a starvation basis. And when H. G. Wells, the 
English writer, formerly a socialist, and who still 
calls himself a collectivist, went there two years 
later in order to admirq their system, the leaders 
admitted to him (that which indeed they could not 
hide), that all the people in the nation were in des- 
perate need of everything, food, clothing, shelter, 
transportation and all the necessities of life. 

Many perfectly disinterested travelers have noted 
that there has been an almost complete disappear- 
ance of all household goods, even bedsteads, mat- 
tresses, bed clothing, etc., as if a marauding army 



44 SHADOW OR SUBSTANCE 

had sacked the whole country. 

But badly as they needed all these things, they 
needed these very industrial managers and experts 
to take charge again of production and transporta- 
tion and re-establish efficient methods and the 
problem was, how to bring them back under com- 
munism. And then a year later an accidental 
drought brought on the catastrophe. This should 

have been expected and foreseen, because Russia 
has always had periodic droughts, but, under the 
government of the Czar, the peasants produced 
large surpluses of food for export, and transporta- 
tion was sufficiently effective to carry the surplus 
of other sections into the stricken territory and tide 
it over till the next harvest. 

But under bolshevism, the peasants got tired of 
being plundered out of their crops and had ceased 
to cultivate except for their own immediate needs, 
and thus even before the drought the whole na- 
tion was on a hunger basis and the drought con- 
verted it into actual famine and literally drove mil- 
lions of people headlong from their homes in a des- 
perate search for food. 

The scenes of horror which took place in that 
terrible famine have appalled the entire world and 
would tax the descriptive powers of Dante himself. 

Note : — Many of the American relief workers 
reported! that at every station far away from the 



SOCIALISM OR INDIVIDUALISM 45 

seat of the famine, they were besieged by thousands 
of miserable people begging for a crust of bread, 
and that in the famine area itself the people had 
resorted to cannibalism. 

This has forced even the fanatic leaders to re- 
tract a part of their communism and confess that 

they did not know "it was loaded.' They now 
hold out the beggar's hand to the hated capitalists 

and ask them to come and save Russia from the 

terrible abyss into which they have plunged her. 

Bolshevism the Main Cause of the Catastrophe. 

There are many who sincerely believe that this 
catastrophe in Russia is not the inevitable result of 
the socialist revolution, but was produced by other 
causes, such as the world war, the civil wars, the al- 
lied blockade, etc. These no doubt contributed 
their share of destruction, but they were small fac- 
tors when compared to bolshevism itself. 

The official platform and statutes adopted by 
the communist Internationale and reported in the 
Isvestia^ the official organ of the Soviet, demon- 
strates this beyond a shadow of doubt, it reads 
as follows: 

"The victory of socialism over capitalism, as the 
first step to communism, demands the accomplish- 
ment of the following tasks by the working people 
as the only revolutionary class. 



46 SHADOW OR SUBSTANCE 

'The first is to lay low the exploiters and first of 
all the bourgeoisie as their chief economic and po- 
litical representatives; to completely defeat them; 
to crush their resistance. 

"Only a violent defeat of the bourgeosie, the con- 
fiscation of their property, the annihilation of the 
entire bourgeois government from top to bottom, 

parliamentary, juridical, military, beaurocratic, ad- 
ministrative, municipal, etc. Only such measures 

will be able to guarantee the complete submission 

of the whole class of the exploiters. 

"The preparation of the dictatorship of the prole- 
tariat demands the replacing of the old leaders by 
communists, in all kinds of proletarian organiza- 
tions. 

"It is necessary to remove all the representatives 
of the labor aristocracy, or such bourgeois work- 
men, from their posts and replace them by even 
inexperienced workmen, in sympathy with the ex- 
ploited masses. The dictatorship of the proleta- 
riat will demand the appointment of such inexperi- 
enced workmen to the most responsible positions, 
otherwise the labor government will be powerless.' 

Here you have the program of destruction in all 
its simplicity. 

The dictatorship of the inexperienced, the ignor- 
ant and the incapable and the complete destruction 
of all the bourgeois, which means all the class which 
has intelligence and has therefore accumulated any 



SOCIALISM OR INDIVIDUALISM 47 

property, much or little. 

The moment such a program is decreed in a 
nation, with the abolition of private property, then 
the whole nation is turned from production into 
looting, murder and destruction. All the prison 
doors were of course opened, because all the crim- 
inal classes were simply offenders against the bour- 
geois government and morals, and were regarded 

favorably by the Bolsheviki. These criminal classes 
were turned loose with the sanction of the new law 
to plunder those who had anything. They were 
of course reinforced by all those who were only 
restrained formerly by fear of punishment. Pro- 
duction of course ceased almost at once, because 
who would care to work at some hard task when 
it is more interesting and profitable to plunder the 
enemies of the new revolution, and these of course 
were all those who had any property. For instance 
coal mines ceased to be operated under that system 
because digging coal is very irksome labor and no- 
body will do it except under necessity. 

In a cold country like Russia, fuel soon becomes 
scarce when production ceases, but the communists 
need not suffer when they can seize the personal 
property of the bourgeoisie and burn up their tables, 
chairs, bedsteads, etc. 

Moreover all semi-public property at once ceases 
to belong to anybody in particular and can be seized 



48 SHADOW OR SUBSTANCE 

by the first who comes along. Thus thousands of 
freight cars on sidings everywhere were destroyed 
to provide fuel for the people and even wooden 
blocks were torn up from the streets for that pur- 
pose. 

Transportation was, of course, immediately de- 
moralized under such conditions, and all the social 
activities which depended on it were broken down 
along with it. 

Communism Destructive to Agriculture. 

But the most direct effect of the Bolshevist 
scheme was on agriculture and we can quote Lenin 
himself on that point as published in The Isvestia, 
the official organ of the Soviet leaders. 

The introductory declaration of the communist 
party resolution on this subject is illuminating. It 
reads as follows: 

"No one but the city industrial proletariat, led 
by the communist party, can save the laboring 
masses in the country from the pressure of capital- 
ism and landlordism." 

How they propose to do this is explained further 
on as follows: The revolutionary proletariat must 
proceed to an immediate and unconditional confis- 
cation of the estates of the landowners." 

"After the proletarian coup d'etat not only the 
confiscation of the landed estates shall become ab- 
solutely necessary but also the banishment or intern- 



SOCIALISM OR INDIVIDUALISM 49 

ment of all the landowners." 

"The proletarians must put up with a temporary 
decline in production so long as it makes for the 
success of the revolution." 

But this decline of production did not prove to 
be temporary at all. It was found to be a perma- 
nent feature of Bolshevism and it got worse and 
worse and by the spring of 192 1/ conditions had 
become so acute that Lenin addressing his followers 
before the all-Russian communist convention said: 
"We must take most immediate, most urgent, most 
extreme measures for the improvement of the condi- 
tions of the peasantry and the raising of itsi produc- 
tive forces." 

*The trouble with our peculiar military commu- 
nism consisted in that we practically took from the 
peasants all the superfluous foodstuffs and even 
sometimes part of what the peasant really needed 
for himself , for the needs of the army and the work- 
ers in the cities." 

He also spoke of the lack of farm animals which 
prevented the transport of firewood, our chief fuel, 
by the peasant's horses. 

Any sane man of ordinary intelligence could eas- 
ily have foreseen that the banishment or imprison- 
ment of all farmers who knew anything about farm- 



50 SHADOW OR SUBSTANCE 

ing, the confiscation of all their property and the 
commanded ing of their farm animals would surely 
paralyze the greater part of agricultural production. 

Also that you could not expect the peasants to 
continue to produce, when they were robbed of 
even what was necessary for their own needs and 
of the grain necessary for seed. 

No surer scheme could possibly have been de- 
vised that would so quickly reduce the whole nation 
to a hunger basis. 

But the interesting thing is that the Bolsheviki 
themselves foresaw it, but thought it would be only 
temporary; and that Lenin himself now admits it. 

The communist leaders found it comparatively 
easy to prod the ( city workmen in the back with 
soldiers* bayonets but the peasants in the country 
were far too numerous and scattered to be reached 
by that gentle manner of persuasion. It would have 
taken millions more of soldiers in the red army to 
reach the 1 40 millions of peasants and this sheer 
physical fact compelled the communists to conceed 
that the peasants must be allowed to work indi- 
vidually in their own way. 

Annual Production the Main Wealth of a Nation. 

John Stuart Mill demonstrated that the main 
wealth of a nation consists almost entirely of its an- 
nual production. The little accumulated personal 
property and permanent improvements of the past 



SOCIALISM OR INDIVIDUALISM 51 

are wholly insignificant when compared to the an- 
nual production. 

When a people therefore is turned from this an- 
nual production to loot and consume the little ac- 
cumulation of the past, it is soon dissipated and the 
whole nation is quickly reduced to abject misery 
from cold, hunger and disease. In their abysmal 
ignorance these bolsheviki imagined that because 
some so-called bourgeois and a few aristocrats 
lived in comfort on their incomes that all they had 
to do was to take it away from them and then all 
the people could enjoy the same ease. They failed 
to realize first that this class constituted only an 
infinitesimal small number compared to the immense 
mass of the people and that if all the incomes of all 
the aristocrats and bourgeosie combined should be 
distributed among the people it would only contrib- 
ute a small addition to the income of each one of the 
many millions of workers. And second that the 
wealth of the privileged classes consists mainly of 
paper titles which enables them to receive a share 
of the annual production and that when this annual 
production ceases all this wealth disappears as if 
by magic. 

In other words, the main trouble in Russia was 
not so much the wealth enjoyed by a small class as 
the fact that the whole nation suffered from poverty 
due to scanty production. If the great masses of 
the people had received every bit of the annual 



62 SHADOW OR SUBSTANCE 

production of the nation they would still have been 
miserably poor and the total elimination of the in- 
comes of the wealthy class would have been scarcely 
noticed in the total result. The main struggle, 
therefore, of the Russian people, considering them 
as a unit, was against the forces of nature and their 
hard environment. In this struggle they were great- 
ly aided by the guidance and intelligence of the 
small wealthy class which unauestionably contrib- 
uted fully as much to the total result as they re- 
ceived from it. The masses destroyed this class in 
order to seize what they had, but in doins: so, they 
lost bv the diminished efficiency of production in- 
comparably more than they gained. 

It is perfectly evident thst the introduction o£ 
such a system in the United States even now would 
precipitate a greater catastronhe than it did in Rus- 
sia because we are a more highlv develoned indus- 
trial nation and more of our people are dependent 
for existence on the regular processes of produc- 
tion and distribution. 

The population of the whole Russian Empire just 
before the war, was according to the Czar's census 
of 1910 and the estimates of increase up to 1914 
about 1 78,000,000. It was estimated that the pop- 
ulation of Russia had shrunk about 10,000,000 by 
reason of the world war and by the decrease in 
births and increase in death rate, so that at the out- 
break of the Revolution it was about 168,000,000. 

The Russian Soviet authorities took a census of 



SOCIALISM OR INDIVIDUALISM 53 

Russia and of the federated republics and terri- 
tories under their control in August, 1920. The 
results of this census were reported in the third Rus- 
sian census publication by M. W. Mikhailovsky, 
director of the central statistical bureau of the cen- 
sus, and also by Dr. A. N. Syssin, head of the Peo- 
ple's Health Commissariat of the Soviet Govern- 
ment. 

These facts were translated and reoublished in 
the "Epidemilogical Intelligence* ' published by the 
Health section of the League of Nations and also 
reviewed in the Public Health Reports of our Gov- 
ernment (Washington, D. C. ). Dr. Syssin compiled 
the official total population of Russia and all fed- 
erated republics and territories under the Soviet 
regime or affiliated with it, in August, 1920, about 
three and one-half years after the Revolution, as 
131,546,000. This is about 36,450,000 less than 
the estimate in 1917. A part of this shrinkage 
was due to the loss of territory suffered by Russia 
after the war which made Finland, Esthonia, Lat- 
via, Lithuania and Poland independent states and 
annexed Bessarabia to Roumania and also took 
away part of Trans-Caucasian territory. The loss 
of population from this source was in round figures 
about 18,450,00, which, deducted from the 36,- 
450,000, leaves about 18,000,000 actual shrinkage 
of population in the territory ruled or controlled by 
the Russian Communist Soviet. 

A part of this shrinkage is accounted for by the 
emigration of millions who made their escape into 



54 SHADOW OR SUBSTANCE 

foreign countries. 

M. Mikhailovsky estimates this loss at between 
two and three millions of people. He also esti- 
mates that about one million lost their lives in the 
civil wars and commotions by murder and other 
violence. The figures of the census which give the 
males as 61,029,000 and the females at 70,517,- 
000, or an excess of about 9,500,000 females over 
males, are highly suggestive of wholesale violence 
and disorder, which naturally kills off the males 
faster than the females. This leaves a shrinkage 
from natural causes, such as disease, starvation, etc., 
of about 15,000,000 in the population of Soviet 
Russia in the 3|/2 years of Communist rule up to 
August, 1920. The official figures given by both 
Dr. Syssin and M. Mikhailovsky abundantly ex- 
plain this loss. They show by the vital statistics 
compiled all over Russia that the death rate in 
1920 had reached the awful figure of 55.8 per 
1 000 of the population, as against a death rate 
of 25.4 per 1 000 before the war. 

And at the same time the birth rate, which be- 
fore the war had been as high as 45 per 1 000, had 
shrunk in 1920 to 24.6 per thousand. So that the 
deaths were more than twice as great as the births. 

This shrinkage of about 30 per 1 000 of pop- 
ulation every year computed over the entire pop- 
ulation of Soviet Russia would show a loss of about 
3,930,000 people a year, and abundantly explains 
the decrease of 15,000,000 population in about 3 
years of Soviet Rule. 



SOCIALISM OR INDIVIDUALISM 55 

More than half the deaths were due to infectious 
diseases, of which typhus fever accounted for 27.4 
per cent, pneumonia 9.1 per cent, tuberculosis 6.5 
per cent, dysentery 4.6 per cent and starvation 4.4 
per cent. 

The city of Orel is a typical example of the 
shrinkage of population. It had in 1913 a pop- 
ulation of 97,200 and in 1920 the population was 
63,800, or a loss of 33,400, which is more than 
one-third. In 1920 the births in that city num- 
bered 1044 and the deaths 3559, which caused a 
loss of 2515 and showed that they were dying 
more than three times as fast as they were being 
reproduced. These vital statistics are simply ap- 
palling. The old, the infirm, the young children, 
the feeble and the invalids all die in increasing 
numbers under these conditions. 

Since this census was taken, the great famine in 
the Volga region took place, in which millions per- 
ished by actual starvation and the population re- 
verted to cannibalism in many places. Also three 
great epidemics took place, one of typhus fever 
in which Dr. Copeland, who visited the stricken 
area last summer, estimated that there had been 
millions of cases of typhus with a large percentage 
of mortality, another of Asiatic Cholera and dysen- 
tery and another of influenza with its accompanying 
pneumonia. All these reaped their harvest of death. 

Only the strongest individuals are able to survive 
in the acute conditions of misery which pervail. The 



56 SHADOW OR SUBSTANCE 

population of Petrograd which was over 2,000,000 
before the war, had shrunk to about 600,000 in 
1921 and all the other cities except Moscow, the 
capital, were falling into similar decay, actually dy- 
ing before our eyes. This process is continuing and 
Russia is reverting to a primitive peasant nation 
such as it was in the 1 6th century. Under that con- 
dition it will not be able to support more than about 
40,000,000 people in the whole empire and all the 
other 100,000,000 people will be superfluous and 
have to die by misery, disease, famine, pestilence, 
murder or cannibalism. And yet the friends of Soviet 
Russia are trying to persuade us that all is well in 
this wonderful Utopia and that we should make 
haste to imitate them and get into the same con- 
dition. 

In the United States 1 00,000,000 people are able 
to live only because of the regular process of pro- 
duction and distribution. The sudden interruption 
of these and the destruction of our modern indus- 
trial organization would undoubtedly condemn mil- 
lions upon millions of our people to death in some 
form or other. Under a more primitive peasant or- 
ganization our country would support only a scant 
20,000,000 people and the other 80,000,000 peo- 
ple would be superfluous and have to perish. Such 
a result would be the most appalling catastrophe 
that has ever taken place in human history, and yet 
there are a few deluded radicals who are thought- 
lessly and carelessly trying to bring it about. 



SOCIALISM OR INDIVIDUALISM 57 

To apply a well known parable: "And Satan 
(personifying the powers of evil) took a people up 
on a mountain and spread before them a mirage of 
wealth and luxury and said, "All these are yours 
if you will bow down and worship me," But Jesus, 
in a similar situation, replied: "Get thee behind 
me, Satan; what does it profit a man to gain the 
whole world if he loses his own soul?' 

This greatest of ethical teachers knew that the 
victim only imagines that he is going to gain the 
whole world when he sacrifices his own soul for it. 
In reality he is being double crossed by the forces of 
evil, and he loses not only his own soul, but every- 
thing else along with it, and reaps a harvest of 
death besides. 

The Russian Bolsheviki, however, yielded to the 
temptation and reached out for the ignis fatuus of 
plunder, and behold! the mirage vanished and the 
alluring plunder turned like the apples of Sodom to 
dust and ashes at their touch. 

But some radicals may object that they do not 
desire to go to the extremes of the Bolsheviki and 
that they only desire to bring about their system by 
moderate steps. In other words, they will make 
it less painful by cutting off the dog's tail an inch 
at a time instead of at one stroke. 

The Inevitable Result of Revolution* 

Let no one deceive himself on this point. When 
a revolution is under full headway it is inevitable 

that it will go to the utmost extremes. In a gen- 



58 SHADOW OR SUBSTANCE 

eral state of popular excitement it is certain that 
the most excited will come out on top. The orators 
who advocate moderation, restraint and common 
sense, will not be considered eloquent. They will 
likely receive rotten eggs and brickbats rather than 
applause, and the frenzied paranoiacs or dema- 
gogues will be acclaimed as the real leaders. The 
name Bolsheviki means those that demand the max- 
imum, the extremists. When the Czar was over- 
thrown by the revolt of the army, it was not only 
his government that was overthrown, it was the 
whole authority of law, the basis of the whole so- 
ciety. Everybody felt at once that he was free 
from all the restraints imposed on him previously. 
The whole of Russia became a debating society on 
every street corner, and it was inevitable that final- 
ly those who were most frenzied and who prom- 
ised the most should be carried into power by the 
populace. 

No workman could understand why he should 
work now that he was free. They were compelled 
to work under the Czar, then what was the use 
of being free if they had to work just the same 
after getting rid of the Czar? 

All taxes ceased to be paid because the tax gath- 
erers were regarded as the agents of the Czar and 
the new government had to sustain itself by issues 
of unlimited paper money. 

The weak Kerensky and his colleagues imagined 
that they could hold the revolution in moderation 



SOCIALISM OR INDIVIDUALISM 59 

while they built up the new government, but it was 
an idle dream. The only way that this could have 
been done was to at oncef sternly restore the su- 
premacy of the law and they were partly unwilling 
and partly unable to do that. 

The parlor radicals, who talk so lightly of rev- 
olution, should seriously reconsider their conclu- 
sions. A revolution which merely transfers polit- 
ical power from one group to another must not be 
confounded with one which completely sweeps 
away all the authority of law on which the whole 
social structure rests. Such a revolution, once set 
in motion, gathers momentum and is not easily 
checked until the whole nation is hurled into the 
abyss. As the great philosophic historian Macau- 
lay pointed out, once a nation is started on that 
downward course there is nothing to stop it except 
the accidental appearance of a superman. Either 
a Caesar or Napoleon will seize the reins of power 
and restore order or else both civilization and lib- 
erty will perish and we will be as fearfully ravaged 
by the barbarians of the twentieth century as Rome 
was in the fifth. With the only difference that the 
Huns and Vandals who ravaged Rome came from 
without while our barbarians will come from, within 
our very midst, for in the vicinity of our finest edi- 
fices, within the very shadow of our noblest cathed- 
rals lurk savages fiercer than any who followed 
Genseric and barbarians more terrible than those 
led by Attila. 



CHAPTER III. 

CAPITALISM. 

Exploitation or Construction. 

When law and order are restored in Russia, if 
men with capital, energy and enterprise will go into 
Russia, buy the ruined factories, organize industry 
into efficient working order and get the people to 
work steadily at a wage which conditions will jus- 
tify, leaving, of course, a profit for themselves, will 
they be exploiting or benefitting the working peo- 
ple? Is the man who takes that risk and undergoes 
that worry, trouble and personal effort entitled to 
a profit or not? Does the profit come out of the 
worker or does it come out of the greater efficiency 
of industry? ; ? j 

Does a system which enables a worker to work 
at a wage greater than he could make working for 
himself, exploit or benefit him? 

Less than twenty-five per cent of the world's 
people live in fully developed capitalist countries 
and it is precisely in these that the wages are high- 
est and that the general well being of the people 
is incomparably better than in the balance of the 
world. 

Capital multiplies the productive power of human 
labor, it expresses itself in power-driven machinery 
and efficient industrial development, and gives a 



SOCIALISM OR INDIVIDUALISM 61 

nation an abundance of everything conducive to 
human welfare. 

Will anybody contend that the workers are not 
benefited by this as much or more than any one 
else? 

Workers Benefited by Capitalism. 

According to the United States Census Reports 
of 1910, Vol. VIII, page 129, there was then used 
by the manufacturers of this country power-driven 
machinery amounting to 18,675,376 horse-power, 
which was their property. It is estimated that this 
machinery did work equivalent to that of 90,000,- 
000 men working by hand. 

That report also tells us that these manufacturers 
at that time had 6,500,000 working men employed 
by them. So that the manufacturers may be said 
to have had about 1 4 times as many mechanical 
workers with steel nerves and muscles working for 
them as they had human workers. Did the man- 
ufacturers get 1 4 times as much of the product as 
their human employees? This would be the case if 
they got the full benefit of their ownership of their 
steel machines. But this is far from being the true 
fact. Instead of getting fourteen times as much, 
the return to the manufacturers was only about 
half as much as the wages they paid to their working 
people. 

In fact, the return to the capitalist manufacturers 
was only about twelve per cent on their invested 



62 SHADOW OR SUBSTANCE 

capital. When we consider that machinery be- 
comes worn out and obsolete in a few years and 
has to be scrapped on an average every ten years, 
and as John Stuart Mill said in his political economy 
that! capital is kept in existence from age to age 
not by preservation but by perpetual reproduction, 
and that every part of it is used and destroyed gen- 
erally very soon after it is produced, we cannot 
consider a return of twelve per cent annually as 
anything more than sufficient margin to secure the 
continuous reproduction of the machinery worn out 
and the development of the new machinery required 
by invention. 

The truth is that this margin is so small that all 
the manufacturers have to exercise unusual vigi- 
lance, prudence and foresight to keep it on the right 
side and it is also the reason why so many of them 
fail. How long would this margin last, if instead 
of the trained experts who now manage the factor- 
ies, we would turn the management over to politic- 
ians elected by ballot? How long would it take 
walking delegates, whose specialty is eloquence 
rather than work, to turn this margin into a deficit? 

Would the laborers even if they took over the 
factories and worked for themselves be able to get 
along with less than this twelve per cent margin? 
Let us compare them to farmers, who are mostly now 
working for themselves, and yet the power they 
use in production in the shape of mules, horses, 
oxen, tractors, etc., has cost them much more than 



SOCIALISM OR INDIVIDUALISM 63 

twenty per cent. We cannot avoid the conclusion, 
therefore, that the lion's share of the benefit from 
power-driven machinery has gone to the work- 
ing classes and that by far the greater part of it, 
has gone into increased wages for them. Fortu- 
nately, we can prove this by actual facts beyond 
the possibility of doubt. 

England's Condition in 1S50 and SO Years Later. 

Let us compare the condition of England in 1 850, 
when Karl Marx began writing his "Capital" and 
when production by power-driven machinery was 
just getting under full headway, and its condition 
fifty years later, and we find that there was a very 
remarkable progress in all the arts, sciences, indus- 
try and transportation. Numberless factories were 
developed, production multiplied many fold, and 
the railroad transportation system was created and 
developed to a high efficiency. Transportation by 
water was also practically re-created by the build- 
ing of immense iron steamships, and great seaports 
were constructed. All this was progress in a high 
degree. 

Now what was the effect of all this on the work- 
ing masses of the people? 

Judged by every standard, the general well be- 
ing of the masses of the people was very much 
better in 1901 than it was fifty years before. 

If the general level of wages in 1851 be taken as 
the standard and placed at 1 00, then we find that 



64 SHADOW OR SUBSTANCE 

by comparison the general level in 1901 would 
stand at 181.7, or an increase of 81.7 per cent, and 
in a great many industries, wages had more than 
doubled. The deposits of the savings banks deal- 
ing with the working classes increased from 29,- 
000,000 pounds sterling in 1851 to 25 7,000,000 
pounds sterling in 1901, an increase of 800 per 
cent. The friendly societies, which had barely 
started in 1850 and which had reached a capital 
of only 14,000,000 pounds sterling in 1877, had 
increased to 45,000,000 pounds sterling in 1901. 

The great co-operative societies built up exclu- 
sively by the working classes, which were mere in- 
fants in 1850, had increased to 8,500,000 pounds 
sterling in 1883, and still further increased to 45,- 
350,000 pounds sterling in 1909. 

Inhabited houses increased from 3,278,039 in 
1851 to 6,260,852 in 1901, showing a very con- 
siderable increase of families occupying separate 
houses. 

The marriage rate is a fair index of increased 
prosperity; it was 1413 per 100,000 in 1851 and 
1615 per 100,000 in 1901. 

But the clearest demonstration we have that pov- 
erty had decreased, is the poor law statistics. These 
show that the percentage of paupers in 1859 was 
41.8 per 1000 and that it decreased to 22.6 per 
1000 in 1905. All these facts are found in the En- 
cyclopedia Britannica of 1 9 10 under the titles of 



SOCIALISM OR INDIVIDUALISM 65 

England and Charity and Charities and in the cen- 
sus reports of Great Britain, 1851 and 1901. 

This is the clearest demonstration that the work- 
ing classes of England were greatly benefited by the 
development of power-driven machinery in those 
fifty years, and this was in spite of the fact that dur- 
ing that same period the population of England 
increased from 17,927,607 in 1851 to 32,327,643 
in 1901, in an area of 58,324 square miles, or 
from 307 to the sauare mile in 1851 to 557 per 
sauare mile in 1901. Under ordinary conditions 
this enormous increase of population in that limited 
area would have had a tendency to greatly in- 
crease the pressure of population upon the land 
and to aggravate the condition of the masses and 
to accentuate pauperism, but this was entirely over- 
come by the tremendous development of industry 
and the benefits which it brought to the working 
classes. 

False Statement in Propaganda. 

A great deal of the propaganda of discontent in 
this and other countries has been based upon the 
careless thinking and preposterous statements of 
ignorant agitators which nobody has taken the trou- 
ble to contradict with the true facts. One of the 
most common statements made and repeated every- 
where by soap box orators until it has passed for 
the truth is that the wage workers in this country 
produce about six times as much as they receive in 
wages and that the capitalist class receives as its 



66 SHADOW OR SUBSTANCE 

share this enormous percentage of the product, and 
the United States Census is given as authority for 
this statement. 

The True Facts From U. S. Census. 

On page 129 of Vol. VIII of the United States 
Census Reports of 1910 we discovered how ab- 
surdly false this statement is and also how it origi- 
nated. It gives total production of manufacturers 

in 1909 as $20,672,051,870.00 

Total expenses of manufactur- 
ers in producing said prod- 
uct $18,454,089,599.00 

Gross balance remaining 

to manufacturers ._$ 2,217,962,271.00 

The total expenses are divided up as follows: 

Paid out for the raw materials 

used in above production. _..$1 2,1 42,790,878.00 

Wages paid to wage-workers 

engaged in this production.. 3,427,037,884.00 

Salaries, etc., and other over- 
head expenses 2,884,260,837.00 



Total .....$1 8,454,089,599.00 

Now while it is true, as we see above, that the 
gross product is about six times, in value, the wages 
paid to the wage working class, yet it is utterly false 
to draw the conclusion that the capitalists received 
that as their share. Before that gross product can 
be produced at all, the raw materials must be bought 
and paid for, all the other expenses have to be met 



SOCIALISM OR INDIVIDUALISM 67 

and the wages of labor have to be paid. The cap- 
italist owners therefore receive as their share only 
the net return after all these expenses are deducted 
from the gross product. 

The ignorant, dishonest or careless soap box agi- 
tator never stopped to analyze these figures and 
either overlooked or ignored these necessary items 
of expense and jumped to the conclusion that the 
wage working class were creating six times as much 
wealth as they were receiving in wages. 

To do that they would have had to create it out 
of nothing, whereas the true facts are that the en- 
tire manufacturing plant took: 

Raw material worth $12,142,790,878.00 

And converted it into finished 

product worth ., ..$20,672,051,870.00 

And therefore added a value 
to the raw material amount- 
ing to . $ 8,530,660,992.00 

In creating this additional val- 
ue, however, and in selling 
the product certain unavoid- 
able expenses had to be met. 
Taxes paid to federal, state 

and municipal governments.. $ 351,309,449.00 
Rent for buildings, factories 

and warehouses 106,573,661.00 

Work paid for under contract 1 78,645,635.00 

Other expenses, rent of offices 
and salesrooms, rent of ma- 



* 68 SHADOW OR SUBSTANCE 

chinery, royalties, use of pat- 
ents, insurance, advertising ; 
traveling expenses, salesmen 
and all other sundry exp..... 1,309,15 7,125. 

Total of these expenses... „....$ 1,945,685,870.00 
Deducting expenses from the..$ 8,530,660,992.00 
We have the net value added 

bv manufacture 6,584,975,122.00 

This net value added by the process of man- 
ufacture was divided as follows: 
Wages paid to the wage earning 

class ..$3,427,037,884 00 

Salaries to other classes of em- 
ployees, clerks, salesmen, 
managers, engineers, book- 
keepers, experts, officers of 
corporation, superintendents, 
etc $ 938,574,967.00 

Total wages and salaries pd. $4, 365, 61 2,85 1 .00 
Return to capitalist owners. ... $2, 2 1 7,962,281 .00 
To analyze the above figures graphically in per- 
centages we find that the total product of man- 
ufacture is made up as follows: 
60% goes to raw material; 

21 % to wages of labor and salaries of employees; 
8% to other sundry expenses, such as taxes, rent, 
insurance, adv. and selling. 

89% is the total in expenses, and that the owners 
get 1 1 % of the total production as profit. 



SOCIALISM OR INDIVIDUALISM 69 

But this 11% of the total product represents 
about 12% on the total capital invested, 
which was about $2,000,000,000 less than 
the annual production. 

It is perfectly evident from the above figures 
that the owners of the factories, far from receiving 
the amazing returns claimed by the socialists, are 
actually receiving a return which is only about one- 
half that paid to all their employees. This return 
represents only about 12% on the capital invested 
in the factories. 

Moreover, on page 1 30 of the same volume the 
census statistician informs us that this return given 
above did not take into account the depreciation of 
the plant and buildings because it was too difficult 
to compute it fairly in all the different individual 
cases and that this return would have to be con- 
siderably reduced if allowance were made for this 
depreciation of plant. 

In other words, the owners of the factories out 
of their return of 1 2 % had to take care of de- 
preciation and the continual reproduction, repair 
and replacement of their machinery and plant. It 
is perfectly evident that this margin is no more than 
sufficient to accomplish this purpose satisfactorily 
for any length of time, taking into account periods 
of depression.* 

* Author's Note: See "Income in the United States," published 
by The National Bureau of Economic Research, for further facts 
on this same line of thought, and brought down to a more 
recent date up to and including 1919. 



70 SHADOW OR SUBSTANCE 

It is also perfectly evident that viewed broadly, 
over a long period of time, that the lion's share 
of the benefit of power-driven machinery has gone 
to the laboring classes in increased wages, and that 
they could not have secured more of the benefit 
ifj they themselves had owned the factories from 
the beginning. 

Socialist State Must Have a Surplus. 

Even a complete socialist state could not get 
along without accumulating a surplus. The surplus 
— namely, that part of production not consumed 
each year and saved to be reinvested, is very im- 
portant to a nation and it would be just as im- 
portant to a socialist government as it is under cap- 
italism. Without it you cannot advance one step; 
no new improvement to transportation, to a road, to 
a farm, to a river, to a harbor or to a factory can 
be made without a surplus. If the owners have 
not saved up a surplus themselves to make the im- 
provement, they must borrow somebody else's sur- 
plus. But the surplus must be available some- 
where before the improvement can be made. The 
nation that would consume all it produces year by 
year would be headed straight to ruin. It could not 
build a highway, a canal, a new railroad, or any 
other new improvement. The Bolsheviki delega- 
tion at Genoa proclaimed loudly that Russia was 
stuck and could not start up again without a loan. 
What does this mean in plain language? It means 
that her surplus was all gone, all exhausted, stolen 



SOCIALISM OR INDIVIDUALISM 71 

or destroyed and that they wanted to borrow the 
surplus accumulated by outside people in order to 
stait up again. 

So that even a socialist state would have to save 
up a surplus* in order to be able to maintain its in- 
dustry, its transportation, and its general condition 
up to the requirements of advancing civilization. 
To do this it could not possibly pay to its working 
classes all that they produced, and it would un- 
questionably have to deduct fully as much as is now 
deducted under capitalism. 

In that case the worker could not possibly get 
all that he produced and could not get more than 
he receives under capitalism. 

But under the socialist regime this surplus would 
have to accumulate in the hands of the political 
chiefs at the head of the government. 

Does anybody with any experience believe that 
these politicians would prove more honest than the 
ones we are now familiar with? 

Surplus Under Capitalism. 

Under capitalism this surplus accumulates in the 
hands of the ones who own the factories. They 
take care of it because they think they own it, 
whereas it more often owns them, and they reinvest 
it in new enterprises which benefit the whole nation. 
From the point of view of national welfare, this 
saving and reinvesting the surplus by the so-called 
wealthy people is of the utmost importance and 



72 SHADOW OR SUBSTANCE 

overshadows by far their role of spenders on them- 
selves, which is insignificant by comparison. 

Even the ostentatious and foolish spending of a 
few idle rich, tho condemned by all serious minded 
people, is not without some measure af social util- 
ity in the long run. 

It appeals to thousands of people who regard it 
as the acme of pleasure and fills them with the am- 
bition to get rich themselves and thus stimulates 
them to extra effort and to save in order to reach 
that supposed happy state. These efforts are ben- 
eficial to production as a whole and increase the na- 
tional income. Moreover it quickly separates the 
fools from their money and passes it into more use- 
ful hands. 



CHAPTER IV. 

EXAMPLES FROM CHINA, THE PHILIPPINES 

AND INDIA. 

The Condition of China. 

Let us compare this country with China, where 
capitalism has never developed beyond the most 
primitive stage, China has a fertile soil and great 
natural resources, but they have few tools, poor 
transportation and little machinery. In consequence 
production is feeble and wages are necessarily low. 
Because, 1st us not forget, the wages of labor are 
paid out of what labor itself produces and when, 
therefore, production is small, wages must also be 
small. 



[ow, would it rob the laborers of China, if cap- 
ital should go in there and develop efficient power- 
driven machinery, production and transportation? 
Will they be exploited when they produce sixty 
times more than at present and receive forty-eight 
times as much wages? 

The Development of the Philippines. 

We have the answer in the Philippines. Ameri- 
cans with capital, brains and enterprise went in 
there, though our government did everything it 
could to discourage them. They took the primeval 
jungle, useless to man or beast, drained and cleared 



74 SHADOW OR SUBSTANCE 

it and constructed perfect concrete highways 
through it, built splendid villages with neat cot- 
tages in which prosperity, cleanliness and thrift 
have taken the place of poverty, squalor and shift- 
lessness, substituted pure artesian waterworks for 
polluted wells and springs, built factories, club 
houses, concrete school houses and theaters and es- 
tablished scientific cultivation, taught the workers 
how to really work and multiplied their wages 
many times. Of course, they did it to make a 
profit for themselves. But is there any other way 
that we could have gotten them to work for those 
Filipinos? Are they not entitled to their reward? 
Did they not benefit the Filipinos even more than 
themselves? Is this exploitation? Marx says yes, 
but the experience of mankind says no! I prefer 
to call it enlightened self interest, which is better 
and more durable than benevolence; and a system 
which puts a superior man under the impulse of 
this enlightened self-interest to practically toil for 
the benefit of a multitude of his fellow creatures, 
and elevate and civilize them, cannot be lightly 
condemned. It may not be perfect, but it is far 
from being the worst system. 

Workers in India. 

A letter from Calcutta, India, has just come to 
my notice, in which the writer describes the wrap- 
ping of a small bundle weighing about ten pounds, 
for shipment to the United States. Nine men were 
sent to do this job. One man packed the box 



SOCIALISM OR INDIVIDUALISM 7~ 

and sewed on the burlap; two men helped him, 
one on either side, to hold the corners; each one 
of these had an assistant standing by to relieve him 
if he got tired or had to go out. They were ap- 
prentices learning the trade. Another man was the 
painter, waiting to paint on the address, and be- 
hind him stood his assistant carrying his little tin 
of paints (three inches in diameter) and a palette 
three inches by six inches. Over all these stood the 
Babu or foreman giving his orders, and in addition 
there was a durwan or watchman to keep them 
from fighting and from stealing anything. It took 
those nine men six hours to finish the job that one 
American packer by himself would have accom- 
plished easily in an hour. 

Is it any wonder that the wages in India are only 
a few cents a day? They produce almost nothing 
and therefore receive almost nothing as wages. It 
is worth about 75 cents to pack that box. 

But this 75 cents has to be divided among nine 
men and each one receives only a few cents for 
his labor. If one man can do it by himself in an 
hour, he is a valuable man to his employer, and 
can command five times as much in wages as the 
nine combined. 

Now if we wished to elevate the condition of 
those workmen in India, the first thing we would 
have to do is to educate and train one of the nine 
so that he could do that job by himself, say, in five 



76 SHADOW OR SUBSTANCE 

hours. Then the employer could afford to pay him 
wages of one dollar a day, which would be un- 
precedented for that country. But the labor leaders 
down there would object that this would throw 
the other eight out of employment. This is per- 
fectly true. It would deprive the other eight of the 
job of doing almost nothing and receiving almost 
nothing as pay, and if we stopped at those partic- 
ular eight it would be a hardship on them. But if 
we extended the process all over India, it would be 
a different story. 

The thousands of trained workers earning one 
dollar a day would soon have many wants. They 
would no longer be satisfied to go almost naked 
with onlyi a rag around their loins. They would 
want to protect their feet with sandals and their 
bodies from the scorching rays of the sun. Instead 
or having less than five dollars* worth of house- 
hold goods to each family as now, they would want 
a little comfortable bedding and a few articles of 
convenient furniture. Instead of living in miser- 
able hovels scarcely fit for beasts, they would de- 
sire a more comfortable habitation. Instead of al- 
most starving on a few grains of rice, they would 
want better food. The other eight thrown out of 
employment, if also trained efficiently, could pro- 
duce something worth while and receive suitable 
wages in keeping with their increased production, 
because wages are paid only out of production and 
nothing else. Then their purchasing power and 



SOCIALISM OR INDIVIDUALISM 77 

wants would keep pace with their increased wages 
and there would be an active demand for all kinds 
of commodities and millions of workers would be 
kept busy at good wages in producing them. This 
increased production all over the nation would ne- 
cessitate better buildings, better factories, better 
transportation, better facilities for distribution and 
all the other facilities of what we call civilization. 
All this would require a surplus, but this surplus 
would be there because it would be steadily ac- 
cumulated from the profits of all those great works. 
To nrndi'ce all these things millions of workers 
would have to be emnloved and there would be an 
actiVe demand for laborers of all kinds, There 
would be an actual sca^itv of labor instead of mil- 
lions of unemployed. This scarci*v of labor would 
automatically advance wa^res, which would ne^es- 
sarilv keep pace with increasing production. This 
tremendous increase of production in the who^e na- 
tion would radiate prospentv on everv hand, but 
first and foremost it would be reflected in the in- 
creased well-being, physical, moral and spiritual of 
their working classes, who would unquestionably 
get the lion's share of it. In fact, the improve- 
ment could not take place at all if they did not get 
the greatest part of it. It has to start with them 
and is based on them. 

What, then, may I ask, keeps the workmen of 
India from enjoying this prosperity? What keeps 
them in a poverty so terrible that our imaginations 
can scarcely picture it? 



78 SHADOW OR SUBSTANCE 

The answer is ignorance, pure and simple. It is 
impossible in a short space to show all the ramifi- 
cations of it. To go back to my illustration (which, 
it must be understood, I use only in a broad, gen- 
eral sense). Those workmen imagine that they are 
cheating their employer by compelling him to em- 
ploy nine men to do the work that one could easily 
do. In their stupidity they cannot see that they 
are also compelling him to pay to all the nine the 
same wage that one man should get. By the rules 
of their guild, which compel nine men to produce 
only what one man could do, they limit each one 
of the nine men to receive only one-ninth of the 
wages which one man ought to receive. 

They limit their workers to one-ninth of a real 
man's production, but they also reduce them to 
one-ninth of a real man's wages. In a word, they 
are simply cheating themselves and standing in their 
own light. 

I have no doubt that they would kill the enter- 
prising worker who tried to do a real man's work, 
on the ground that he was a detriment to the union, 
and there is no doubt that they would break up any 
labor-saving machinery that anybody tried to in- 
troduce in the belief that it would take work away 
from them. We can well laugh at the stupidity of 
these Hindus, but let us not congratulate ourselves 
too much, because the workmen of more civilized 
lands are not altogether free from the same kind of 
stupidity. More than once our workmen have de- 



SOCIALISM OR INDIVIDUALISM 79 

stroyed or refused to use labor-saving machinery 
for the same reason, and our labor unions every- 
where, especially in the building trades, have tried 
to limit the output of work so as to compel their 
employers to employ two men to do the work that 
one could easily do. They seem ignorant of the 
economic law (as inexorable as the law of gravity) 
that if two men do only the work of one, it will 
only be a question of time when the two together 
will only receive one man's pay. Either the cost of 
living and the rents will go up, so that the value of 
their dollar will onlv be fifty cents, or thev will 
stand idle most of the time. It is impossible for 
an employer to pay his workmen more than they 
produce without going broke himself and ceasing 
to be an employer. 

The workers who imagine that they can increase 
their wages by limiting production, sabotage and 
other destructive methods, are as ignorant as the 
Hindus I have mentioned and are simply cheating 
themselves. 

The opposite course of increasing production is 
the true way. The man who discovers a way by 
which one man can do the work which now requires 
two will surely increase wages. This is the way that 
wages were increased in the past. It was the in- 
vention of labor-saving machinery which did it. 
On the other hand, if we should suddenly destroy 
all the labor-saving machinery in this country, pro- 
duction would immediately dwindle to a small frac- 



80 SHADOW OR SUBSTANCE 

tion of its present volume and wages would, of 
course, have to shrink in proportion. 

As our people would not quickly adjust them- 
selves to the chronic misery of the Hindus, millions 
of them would perish. Labor-saving machinery, 
therefore, is what stands between us and indescrib- 
able disaster. 

But labor-saving machinery is the result of sur- 
plus. It is surplus that builds it up and reproduces 
it when worn out. Surplus stands in relation to 
labor-saving machinery as the parent does to the 
child. No surplus, no labor-saving machinery. 

But surplus is capitalism. 

It is only another name for it. 

But the socialists say we are not going to destroy 
labor-saving machinery, we are only going to ap- 
propriate it. Perfectly true, but they have de- 
nounced the surplus and have proposed to abolish 
it. This would also soon indirectly cripple labor- 
saving machinery. As Shylock said in Shake- 
speare's play: 'You take my life, if you do take 
from me the means by which I live." 

But recently the socialists say we must maintain 
the surplus in order to maintain the efficiency of pro- 
duction. In that case the worker would get nothing 
more than he does now and the only change that 
they would make would be in those who would 
hold and handle the surplus. Under the present 



SOCIALISM OR INDIVIDUALISM 81 

system it falls in the hands of those who develop 
exceptional genius, management, ability or industry 
by a process of natural selection. Under socialism 
they would be the walking delegates elected by the 
workers. I fail to see how that would improve 
conditions in the least. If there is anything that ex- 
perience has clearly demonstrated in this country, 
it is that the iudgment of the masses in electing of- 
ficials by ballot is exceedingly poor. Our elected 
representatives have usually been those whom any 
prudent man would not entrust with his own busi- 
ness. How then can we expect the surplus to be 
any safer or better managed in their hands? 

One word more in regard to exploitation. 

Some radicals have asserted that American cap- 
ital must not be allowed to exploit weaker people 
like the Mexicans, Chinese, Filipinos, Hindus, etc. 
How is it possible to exploit the Hindus in their 
present condition? They have nothing that any- 
body can take away from them and have them con- 
tinue to live. If American capital went there to 
make a profit (which is what they mean by ex- 
ploitation), it would first have to get them to pro- 
duce something. It would have to improve their 
methods of production, transportation and distri- 
bution so that they would have a surplus worth 
while. Would not this benefit the Hindus more 
than anybody else? This leads me to ask the ques- 
tion, 'What is the chief thing that stands in the 
way of progress the world over?* The answer ia 



82 SHADOW OR SUBSTANCE 

"Lack of intelligence, " or, in one word, ignorance. 
The evil passions of envy, jealousy, malice, hatred, 
prejudice, perversity and greed are contributing 
factors, but in a broad sense ignorance is more or 
less the mother of all that evil brood. 



CHAPTER V. 

POLITICAL DEFECT OF SOCIALISM. 

But the most fatal defect of socialism, I have yet 
to mention. All the difficulties I have pointed out 
above are economic, there remains the political de- 
fect, which is the greatest of all. AH those who 
have read the preceding pages will perceive that the 
first political effect of socialism is to increase 
enormously the power of the state. It multiplies 
by manv times the number of people directly em- 
ploved by the state and therefore dependent on 
the state for their salaries, their emoluments and 
authority over those under them. In every branch 
of industry, transportation or agriculture in every 
hamlet in the land, there will be swarming thou- 
sands of commissars directly under the control 
of the head officials of the state. In Moscow alone 
there are over half a million petty officials of the 
Soviet Government on the payroll. 

And the Soviet has more employees than any 
other government on earth has ever had. Every 
one of these petty officials will be interested in 
holding his job, because to lose it means to get re- 
duced into the same condition as the people under 
him. Self preservation alone will make him cling 
to power as a drowning man grasps at a straw. 

They can therefore be relied on to support the 
chiefs higher up with fidelity and zeal and they will 



84 SHADOW OR SUBSTANCE 

form a political machine, the like of which ha9 
never before been seen on this earth. 

Political Change Impassible Under Socialism. 

As the individual voters under them are abso- 
lutelv at their mercy and can be inmred or bene- 
fited* bv their favor, there is no doubt that the 
r>arty in nower will remain there as lonqr as thev 
like. The fact is that I fail to see whv thev sboulr 1 
even waste the time to hold an election. They 
could iust as well register the result beforehand as 
thev used to do in Mexico, under Diaz. Moreover, 
with the abolition of private property, every news- 
paper, everv printing press and every other means 
of communicating: ideas to the people, becomes the 
pronertv of the state and it becomes impossible for 
anybody opposed to the government to get any- 
thing printed or circulated. Ill-advised activity 
against the head-men would be no doubt followed 
by the arrest and disappearance of the agitator and 
nobody would be the wiser except a few near 
friends or relatives, because! no news of it would 
ever leak out The only newspapers, books or 
pamphlets published will be under the control of 
the head officials of the government and they will 
give the people whatever they see fit to mould their 
opinions. The opposition can never be heard un- 
der that scheme. Preachers, teachers, doctors, law- 
yers, etc., will all be officials of the government and 
hold their jobs under the pleasure of their chiefs. 
Has any machine as powerful as that ever been seen 



SOCIALISM OR INDIVIDUALISM 85 

on this planet? This is the reason that it has been 
impossible to oust Lenin, Trotsky, and their clique 
in Russia; in spite of all their crimes. They are 
many times more powerful than the Czar ever was. 

Marx and Engels foresaw this difficulty and tried 
to meet it by maintaining that the state, as we 
know it, will have ceased to exist and that the so- 
cialist state will be more democratic and more un- 
der the control of the people. I fail to see how. 
Admitting that the socialist state might start out as 
a democracy with the best intentions, would it re- 
main faithful to its original ideals? Has anybody 
ever had power on this earth without abusing it 
sooner or later? The first founders of the move- 
ment might be honest, well meaning altruists, but 
they would in due course of time be succeeded by 
a Napoleon, a Cromwell or a Ceasar and they in 
turn by a Nero, a Caligula, or a Heliogabolus, and 
nobody could ever dislodge them except by assas- 
sination. 

The Split Between Marx and Proudhon. 

This was the point which caused the split be- 
tween Proudhon and his disciple Bakunin on the 
one hand and Marx and Engels on the other. Proud- 
hon told Marx plainly that his system would estab- 
lish a despotism that would make every other one 
that has ever preceded it on this earth pale into 
insignificance when compared to it. Time has dem- 
onstrated that Proudhon was right and that Marx 



86 SHADOW OR SUBSTANCE 

was wrong and the Bolsheviki in Russia have de- 
veloped as atrocious a tyranny as ever disgraced 
this planet. Considering all the facts which have 
come to our knowledge from perfectly disinterested 
observers and from sources even favorably inclined 
to the Bolsheviki, it is perfectly evident that the 
Bolsheviki have been much worse than even the 
unintelligent despotism of the Czar s regime, and 
it is doubtful if there has ever been in the past a 
government at the same time so tyrannical and so 
inefficient as the present Russian Soviet. 

Judging it by the ordinary standards of civilized 
nations, we find instead of security of life, of per- 
son, freedom of individual effort and the enjoy- 
ment of the fruits thereof that wholesale robbery, 
rape, and murder are the daily vicissitudes of life in 
this boasted Utopia. Both Bertrand Russell and H. 
G. Wells, the English radicals and former Socialists 
and the American relief workers all reported that 
conditions in Russia were awful. There is chronic 
continuous hunger among all the people. Tram- 
ways have practically ceased to operate in the 
cities. The railroads are crumbling into ruin from 
lack of necessary repairs. The streets are decayed, 
torn up and impassible. The sewerage systems 
have collapsed, the water pipes have been bursted 
by the cold of winter and filth and unsanitary condi- 
tions are prevalent everywhere and the great masses 
of the people are suffering hideous and frightful 
misery. ^ j 



SOCIALISM OR INDIVIDUALISM 87 

There is no such thing as the slightest personal 
liberty in Russia today. The peasant is forced to 
yield much of his crops to the state without receiv- 
ing any equivalent therefor except worthless paper 
roubles. Moreover, he is drafted to compulsory 
labor and forced to do the most menial work of the 
crudest kind. The workman in the cities is bound 
to his factory or mine, his remuneration is fixed by 
his overseer, the commissar of the state. He can- 
not move without a permit from the labor bureau 
controlled by the state. He is forbidden by the 
Bolsheviki from even going on a strike which is 
considered an act of rebellion against their au- 
thority, and every one of their labor unions have 
been sup prised and abolished by these tyrants. 

Corruption is rife among officials who are bribed 
constantly to do anything. Even food, the life- 
giver, is not handled on a just and fair basis, but 
used as a weapon in social and political struggles. 

Then on top of all this they have the infamous 
and dreaded Tcheka, or extra-ordinary commission 
of justice with unlimited and arbitrary power. It 
searches houses at its pleasure, it raids market 
places, it arrests citizens on mere suspicion and 
maintains a list of so-called suspicious persons and 
puts them into jail on the slightest provocation. It 
keeps men and women for months in solitary con- 
finement without even preferring any charge against 
them. It tries, condemns and executes them, with- 
out so much as the victim knowing what it is for or 



88 SHADOW OR SUBSTANCE 

having the slightest opportunity to defend himself. 
This Tchecka is far more terrible and irresponsible 
than the revolutionary tribunals were in the French 
Revolution and its like has never been seen any- 
where else on this earth. 

There is no political freedom in Russia today. 
Not only the bourgeois parties are under the ban, 
but even all the outspoken radical parties, the men- 
sheviki, the social revolutionists, the social-demo- 
crats, etc., are all deprived of any means to make a 
political campaign, they are forbidden to issue any 
newspapers, magazines, pamphlets and leaflets or 
to call any open meeting of any sort. 

The claim by the friends of Soviet Russia that 

Bolshevism is the government chosen by the Russian 
people is ridicuously false. Numerically the com- 
munists only muster a few hundred thousand mem- 
bers which is less than one-half of one per cent of 
the population of Russia. The Bolsheviki broke up 
and dispersed by violence, the Douma which had 
been elected as a constituent assembly in a free and 
unhampered election and which was fairly repre- 
sentative of the Russian people and for that very 
reason was overwhelmingly against the bolsheviki. 
It is a fact admitted by the Bolsheviki themselves 
that if a free and impartial election were held in 
Russia at the present time they would be in a hope- 
less minority and that is the very reason that they do 
not and will not have such an election. 



SOCIALISM OR INDIVIDUALISM 89 

Lenin and the Bolshevist leaders have always 
frankly declared that they do not believe in the 
democratic rule of the majority of the people. They 
have openly expressed their contempt for the peo- 
ple, whom they call ignorant, unenterprising and 
"lethargic/ They have relentlessly put into prac- 
tice Lenin's 'Theory of Minority Revolution and 
Minority Rule." 

Wherever, by some chance, an important Soviet 
has been elected with a majority against them, or 
has had the temerity to vote against them, they 
have promptly suppressed it with an iron hand. 
Yaroslav, a large industrial city north of Moscow, 
and Krasnoyarsk, another important place, elected 
Soviets with Mensheviki and Social Revolutionary 
majorities against the Bolsheviki. Lenin promptly 
pronounced them Counter-Revolutionists and unfit 
for self-government and abolished their Soviets al- 
together. Every attempt in those places to organ- 
ize self-government after that was sternly suppressed 
in blood. 

The dictatorship of the proletariat therefore does 
not mean self government by the majority of the 
people or government deriving its just powers from 
the consent of the governed; it means the tyranny 
of a comparatively small minority over the balance 
of the nation. It does not establish a free repres- 
entative, republican, or democratic form of govern- 
ment as the western nations understand it; it 
establishes the oligarchy of a small ruling class, not 



SO SHADOW OR SUBSTANCE 

much more numerous than the ruling class of the 
Czar's regime, but far more energetic and more 
closely organized and exercising a more relentless 
tyranny. 

A small minority which forces its will upon the 
majority of a nation must always be tyrannical be- 
cause that is the only way it can accomplish its 
purpose. 

The Ray of Hope in That Terrible Condition. 

But we must not imagine that there is no 
silver lining even to that apparently terrible situa- 
tion. The great philosopher Goethe said that the 
best proof we have of a supervising intelligence in 
the universe is that He is able to turn eventually into 
good what man has intended as evil. No doubt 
from the present Bolshevism a better condition may 
eventually emerge in Russia, even as from the ter- 
rible frenzy of the French Revolution a new French 
nation developed with higher principles of justice 
and equality; because one of the results of the 
French uphpeaval was the dividing up of the land 
of the nobility and clergy amongst the peasants who 
were the real cultivators of the soil and the creation 
of a nation of peasant proprietors. The same land 
distrbution has taken place in Russia and in time 
these new peasant owners, who are the immense 
majority of the people of Russia, may perhaps learn 
how to establish a new government devoted to law 
and the ordinary processes of civilization which will 
be more progressive . and liberal than the old re- 



SOCIALISM OR INDIVIDUALISM 91 

gime of the Czar. It will take, however, a long time 
to accomplish this, because the Russian peasants 
are on a much lower plane of civilization than the 
French peasants of the French Revolution, and it is 
probable that they will go through a long period of 
reversion to a purely peasant nation, 

The greatest contribution of the Bolsheviki to 
mankind therefore, will have been the clear demon- 
stration of the utter impracticability of communism. 



CHAPTER VI. 

GENERAL CONSIDERATIONS AND SUMMARY 

So far I have confined myself mainly to discuss- 
ing the immediate effect of socialism on the working 
classes, but there is a broader and more general 
side to this question, in the ultimate effect of social- 
ism on individuality. 

The Importance of Individuality. 

The human race has progressed in the past main- 
ly by the development of exceptional individuals 
whose genius has increased our power over the 
forces of nature. 

The free scope of individuality is of the greatest 
importance to the future progress of the race. 

Any system therefore which subordinates the in- 
dividual to the state and makes us all conform to 
a standard regulation, and fit nicely in our respect- 
ive little grooves, is bound to restrict the free de- 
velopment of individuality and is certain in the long 
run to diminish the chances of exceptional genius 
being produced. This will ultimately dry up the 
springs of progress. The higher standard of living, 
higher wages and the general distribution of com- 
forts among civilized people are in a broad gen- 
eral sense entirely due to the progress of industry 
which in turn has been based mainly on inventions 
and discovery by men of genius. Any future bet- 



SOCIALISM OR INDIVIDUALISM 93 

terment in the condition of the people and increase 
in their wages can only come about in the same 
way. 

Strikes and fighting about the relative share that 
shall go to this or that group may temporarily 
change the distribution of the industrial income, but 
it will only be temporary and will be more or less 
nullified by the increased cost of living. 

The Real Road to Prosperity. 

Any real permanent pain will only come by im- 
provements in industrial methods, bv inventions and 
by the discovery of new forces and resources which 
will increase production as a whole and therefore 
the total national income. 

Anything therefore which puts an obstacle in the 
path of industrial progress is not going to ultimately 
benefit the masses of the people. 

Yet, strange to say, the working classes have 
always fought against their best interests by refusing 
to use labor-saving inventions and sometimes de- 
stroying them and interfering with prosperity in 
every way possible, by strikes, boycotts, sabotage, 
and inefficiency and curtailment of work and other 
practices. 

Wages even now would be considerably higher 
if it were not for the industrial incapacity of most 
of the workers. 



94 SHADOW OR SUBSTANCE 

It is difficult to imagine what our national wealth 
would be if every worker were efficiently trained 
in a suitable vocation and honestly did the best that 
was in him. I firmly believe that our present wages 
would seem small by comparison with what they 
would then be. 

Private Property Necessary to Civilization/ 

For these reasons which I have pointed out there 
is now an almost unanimous agreement among all 
those who have studied the question at all that any 
attempt to entirely abolish private property must 
prove a flat failure because it conflicts with the 
fundamental traits of human nature. 

We now perceive more clearly than ever before 
that the love of self is yet, as it always has been, 
the moving principle of the immense majority of 
individuals and the motive that alone impels them 
to voluntary and sustained exertion; and this must 
be recognized as the necessary foundation of every 
community, big or little. 

The desire to own and possess material things, 
in short, the desire for private property, is inherent 
in most individuals, and is the mainspring of civ- 
ilization; and opportunity for its gratification must 
be retained in any social system. It is the keystone 
of the arch and when it is removed the whole edi- 
fice crumbles into ruin. It is indeed strange that 
anyone should ever have doubted this for a mo- 
ment. 



SOCIALISM OR INDIVIDUALISM 95 

Communism a Failure Everywhere* 

It is not alone in Russia that communism has 
broken down by itself of its own inherent defects 
and has had to be abandoned even by its most fa- 
natical adherents; the same has taken place every- 
where else on this earth where it has been tried on 
a large or small scale. 

Even under the most favorable conditions, as in 
the great communistic colony of Paraguay, South 
America, where the natural resources were so abun- 
dant and accessible that all human wants could be 
easily satisfied, communism failed and had to be 
abandoned. Moreover, these verv same Colonists, 
who were in abiect misery and privation as long as 
thev practiced communism, became prosperous and 
well to do when they abandoned it and adopted in- 
dividualism. 

The same took place in the communistic 
state established by Gen. Zapata and his follow- 
ers in two of the states of Mexico and the same 
took place even in the small communistic societies 
which were established in many places in this coun- 
tr>1 about the middle of the last century. These 
communities were very favorably situated and their 
membership was voluntary and in many cases was 
selected with some care to secure people who had 
the proper co-operative spirit; and yet they all 
finally proved failures. The same result has been 
noted practically everywhere except in the monas- 
tic orders, where the religious enthusiasm of the 



96 SHADOW OR SUBSTANCE 

members and the severe discipline imposed on them 
by a hierarchy has been able to overcome the in- 
herent defects of communism. 

Socialism Repudiated in Europe Generally, 

The fact is that socialism is being repudiated 
everywhere all over Europe where socialists have 
been in power. For over three years socialists have 
been in powe# in Germany, and they have been 
compelled by the sheer force of circumstances not 
only to reiect any further socialization but also to 
undo much of the state socialism established by the 
former Kaiser's government. 

The difficulty with an industry operated by the 
state, is that it does not have to be a success. When 
it fails to meet its expenses, the state can simply fall 
back on the taxpayers to contribute more taxes to its 
maintenance. In this respect it is like the son of a 
rich father when he goes into business, he feels that 
he can fall back on the old man to help him out 
when the business does not pay, and consequently 
he does not exert himself to make it pay and it 
rarely does. 

A private business is on a real competitive basis, 
it must pay or go broke, and when it goes broke, 
it has nobody to fall back upon and it simply disap- 
pears and makes way for someone else who can 
make it succeed. 

The universal poverty of the Germans brought 
about by the war compelled the strictest economy in 



SOCIALISM OR INDIVIDUALISM 97 

every line of production and distribution and all the 
industrial social and commercial forces were mobil- 
ized with that end in view. A commission headed 
by Karl Kautsky, the undisputed leader among the 
living theoretical socialists, and in which sat the 
well-known socialists, Rudolph Hilferding, Prof. 
Emil Lederer, well-known socialist writer; Paul Um- 
breit, the chief of all the socialistic labor unions; the 
formerly rabid socialist, Wilbrandt, professor of po- 
litical economy at Tubingen University; Otto Hue, 
the coal miners' leader, and Otto Cohen, the social- 
ist secretary of the labor unions, examined the whole 
subject impartially from every angle and unani- 
mously came to the conclusion that nationalization 
was only the replacement of one employer, the cap- 
italist, by another employer, the state, and that in 
actual practice the state as an employer is inefficient, 
dilatory and wasteful. 

Moreover, the commission decided that if in the 
future any coal owner showed more than ordinary 
efficiency, he should be allowed bonuses on top of 
his profits and that these bonuses should not be 
less than the extra profits which he would have 
reaped under free capitalism. 

What becomes then of Marx's famous theory of 
surplus value, the confiscation of which formed the 
central doctrine of socialism? 

Moreover, Marx is now bitterly assailed and re- 
pudiated on all sides. Prof. Wildbrandt of Tu- 



98 SHADOW OR SUBSTANCE 

bingen University, who only three years ago was 
rabidly in favor of the state owning everything, now 
says: 4t Marx must be repudiated." And Rudolph 
Wissell and Robert Schmidt, both socialist minis- 
ters of industry, declared that "the Erfurt program 
is an absurdity and that the socialist program must 
be revised in accordance with real economic facts,' 
which means that Marx must be repudiated. 

So within only three years, a complete revision of 
German socialism has come. The explanation is 
that the most zealous, most ingenious of German 
socialist statesmen could not find any effective sub- 
stitute for the incentive to energy and efficiency 
which under the capitalistic system is supplied by 
the motive of individual gain. 

So that a government by socialists, of socialists 
and for socialists has denationalized and handed 
over to private management most of the complex 
state socialistic schemes of the Hohenzollern regime, 
the railroads, railroad construction and repair shops 
and other vestige of state socialism, and brought 
about the unwilling conversion of the socialists 
themselves. 

It is perfectly evident, therefore, that whatever 
evils we may complain of in our existing institu- 
tions, we cannot hope to make conditions any bet- 
ter by forcibly destroying the institution of private 
property. 



SOCIALISM OR INDIVIDUALISM 99 

The Steady Growth of Co-operation. 

But, on the other hand, we must' not overlook 
the fact that the human race, from the earliest pe- 
riods of its existence on this planet, has been mov- 
ing slowly but continuously and steadily towards 
an ever greater association of individuals together 
for common purposes. 

To find the genuine simon-pure individualist we 
must go back to the primitive savage wandering 
alone in the primeval forest. From thalj time to 
the present day the movement away from extreme 
individualism towards an ever greater development 
of the social man has been unceasing, 

There has also existed a tendency to hold an 
ever increasing amount of property by the state for 
the benefit and use of its people. For instance, at 
one time the highways even were private property. 
Now they belong to all the people and are free for 
their use, and we also have the public parks and 
buildings, the recreation, tennis, golf, foot and base- 
ball grounds, swimming pools, baths, schools, li- 
braries, hospitals and many other forms of pub- 
lic property owned by all the people and held for 
their common use. 

Our endowed colleges and universities and our 
great charitable foundations are a species of semi- 
public property usable by any citizen under pre- 
scribed conditions. 



100 SHADOW OR SUBSTANCE 

Many of our fraternal orders in this country and 
others, such as the Circulo des Dependientes in 
Cuba are examples of co-operative ownership and 
effort, and they hold considerable property in trust 
for their members. Finally, the great co-operative 
societies, notably the Rochdale in England and 
others in Europe, are magnificent examples of hun- 
dreds of millions of property held co-operatively 
and of hundreds of millions of business done yearly 
in that way. 

In fact, the Rochdale association is said to be 
one of the largest financial institutions in the world. 

Co-operation Destroyed by Graft 

But co-operation to be successful must be volun- 
tary. Plato, the original Utopian, pointed this out. 
His ideal was a willing co-operation of citizens in- 
telligent enough to realize its advantages to them- 
selves as well as to others. When people are too 
stupid or perverse to co-operate it is impossible to 
make them do it by force. Force does not make 
them real co-operators, it simply converts them into 
slaves, none the less so because they would then be 
the slaves of a system rather than of one master. 

This is the underlying fallacy in the program of 
socialism. They preach fluently about the beauties 
and advantages of the co-operative commonwealth 
and how much better we would all be if we would 
co-operate fully in all our social activities and at the 



SOCIALISM OR INDIVIDUALISM 101 

same time they advocate accomplishing this by 
force. 

Force and willing co-operation are utterly incom- 
patible. When one comes in, the other goes out. 
Every intelligent man fully realizes the advantages 
of co-operation and admits all that the socialists say 
about it but they also know very well that it is im- 
possible to make men co-operate willingly by force. 

Moreover the success of these co-operations de- 
pends entirely on their being able to secure intelli- 
gent, efficient, and above all, honest managers, and 
this can only be done in a community where there is 
respect for and willing obedience to the laws, and 
this in turn, is the result of just laws impartially 
and promptly enforced. 

Such a condition prevails in England and in some 
other European countries. These societies on the 
other hand have not succeeded in this country, be- 
cause the laws have not been enforced and our ju- 
dicial system has become undermined with polit- 
ical influence and honeycombed with graft, and 
there has in consequence grown up a general dis- 
respect for the law and a relaxation of the moral 
fibre of the people. As Henry George said: **In 
a corrupt democracy the tendency is always to give 
power to the worst. Honesty is handicapped and 
unscrupulousness commands success, and where 
men are habitually seen to raise themselves by cor- 
rupt qualities from the lowest ranks to positions of 



102 SHADOW OR SUBSTANCE 

wealth and power, tolerance or these qualities final- 
ly becomes admiration and finally corrupts all the 
people.' This is our condition today. Here per- 
sons do not hesitate to plunder institutions under 
their charge because they are sure that they have 
a good chance to escape all punishment. 

Violence is Anti-Social. 

For the social organism to function smoothly we 
must have a considerable development of the so- 
cial qualities in its citizens and we must reduce 
to a minimum the anti-social crimes which are in 
reality a revolt against the authority of all the peo- 
ple and their civilization. 

Dishonesty is the friction in the social mechan- 
ism and we cannot hope to achieve a more perfect 
social condition until most of our citizens are willing 
to accept and obey the laws which the composite 
state has made for the guidance of all its members. 

It is the height of absurdity therefore for any- 
body to expect to usher in a higher social condi- 
tion by wholesale violence, plunder and murder. 
These crimes will lower instead of elevating the 
social consciousness of those who commit them. 

When the Bolsheviki turned loose in Russia an 
orgy of loot, lust, murder and all sorts of crimes 
of violence they were not traveling towards a higher 
social order, they were in reality swiftly sinking 
into barbarism. Not the least of their crimes was 



SOCIALISM OR INDIVIDUALISM 103 

the suppression of highly successful co-operative so- 
cieties and the confiscation of their property, which 
proved conclusively that they were enemies of real 
progress. 

To develop a higher social order we must have 
developed among our citizens the qualities of kind- 
ness, gentleness, good will, honesty, sincerity, rev- 
erence, fraternity and equality. These qualities 
are the result of ages of education, religion and 
peaceful development. They are a slow evolution 
and in the very nature of things they cannot be 
achieved by the anti-social crimes of violence. 

Co-operaticn Will Increase. 

With these reservations, however, it is reason- 
able to suppose that the age-long tendency of the 
human race towards an ever increasing co-opera- 
tion will continue for many ages in the future and 
that some time a way will be found for men to en- 
joy all the benefits of association with their fellows 
without losing their individual freedom of action 
or their individuality. 

Also that a way will be found for a very con- 
siderable extension of associated ownership of prop- 
erty which will probably include all natural re- 
sources and monopolies without at the same time 
interfering with man's individual freedom to exert 
himself for his own benefit and to acquire the things 
he desires for himself alone. 



104 SHADOW OR SUBSTANCE 

Inconsistent Rights. 

Finally, we must call attention to the fact that 
the two fundamental rights claimed by socialists 
are: 

1st. The right of the laborer to the full product 
of his labor. 

2nd. The right of every individual to subsist- 
ence. 

These two rights are inconsistent with and fun- 
damentally opposed to each other and could not 
by any possibility be realized at one and the same 
time. 

If either one of these rights were conceded, it 
would necessarily and immediately involve the de- 
nial of the other ,as anyone can readily figure out 
for himself. The right of the individual to sub- 
sistence even when not earned temporarily or per- 
manently by himself, necessarily involves the tak- 
ing away from others of a part of their production 
and therefore is a denial of their right to the full 
product of their labor. 

Marx's entire contention was based on the right 
of the laborer to the full product of his labor. We 
have shown above that there is no practical way 
by which this can be accomplished even under a 
communist state. Altho seemingly just in the ab- 
stract, concrete conditions make it practically im- 
possible of complete realization. Every individual 



SOCIALISM OR INDIVIDUALISM 105 

has to concede a small part of his rights to the com- 
munity in which he lives, in return for the benefits 
and protection he derives from his association with 
them. He also has to surrender a part of his per- 
sonal liberty, in order to accommodate himself to 
living in contact with his fellow men in a settled 
community. If he wishes to enjoy absolute per- 
sonal liberty to do whatever he likes, and to have 
everything he makes for himself alone, he must go 
away by himself into the wilderness far away from 
everybody else. The moment he wishes to live in 
contact with his fellow men he must accommodate 
himself to the equal rights and equal liberty of other 
human beings and this cannot be done without sur- 
rendering a part of his rights and liberty. 

It is very strange, however, that Marx and his 
followers who are so insistent on the one hand in 
claiming the individual's right to every particle of 
the product of his labor, should, on the other hand, 
be the very ones who are advocating the total sub- 
ordination of all the individual' s rights and liberties 
to the state. 

In asserting their fundamental claim of the in- 
dividual's right to the full product of his labor they 
are extreme upholders of the individual's rights and 
therefore extreme individualists, but when it comes 
to carry out their theory they are extreme collectiv- 
ists and are perfectly willing to sacrifice all the rights 
of the individual to the welfare of the state. Incon- 
sistency could scarcely go to a greater length. 



106 SHADOW OR SUBSTANCE 

Practically whatever advance has been made by 
the human race towards the recognition of either 
of these rights, it has been rather towards conced- 
ing the individual* s right to subsistence and to his 
claim on his fellowmen for aid in sickness and dis- 
tress than towards the other one, and this is due 
to the growth of the ideas of mercy, charity, kind- 
ness and benevolence among the masses of civi- 
lized people, which are the virtues we have justly 
regarded as the ones advocated principally by the 
Christian religion. 

Nearly 2500 Years Ago 

Aesop taught the world some homely truths by 
means of his simple fables which many people 
would do well to study again at the present time. 
In one of these he pictured the strike of the hands 
of the human body against the stomach. He said 
that the hands became discontented with their lot 
and said to one another, We suffer all the hard 
knocks of the struggle every day and do all the 
work, in order to feed the lazy stomach which does 
nothing but enjoy itself with the food we provide. 
Let us stop feeding it and enjoy our ease like it 
does/ So they went on a strike and refused to 
convey any food to the stomach. But in a day or 
two, the hands became weak unto death and were 
glad to resume feeding the stomach which they 
discovered to be not so useless after all. A nation 
is an organism to all intents and purposes similar 
to the human body. While its component parts are 



SOCIALISM OR INDIVIDUALISM 107 

not so intimately associated together as the parts 
of the human organism, nevertheless they are suffi- 
ciently interrelated and dependent on each other, 
that one part of it cannot destroy the other without 
committing suicide itself. 



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